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The system closes the change in fund balances/net assets to different accounts depending on the fund and the trial balance or worksheet. We need to understand the system’s process including data flow and automatic closing accounts to be able to properly code the journal entries that are needed to arrive at the proper amounts in the proper net assets (fund balance) classifications for the various financial statements. By understanding the system defaults, we know when we either need to override the default or enter a reclassification entry as appropriate for the given circumstances.
System Defaults
The Modified Accrual Trial Balance is used to prepare the fund financial statements for the governmental funds using the modified accrual basis of accounting and the current financial resources measurement focus. The system will close the net change in fund balance to unreserved, undesignated fund balance reported in general fund, special revenue funds, debt service funds, capital projects funds, or permanent funds, as appropriate. The system will select the appropriate account by fund based on the fund type selected in the fund setup screen.
The Governmental Restricted Net Assets Trial Balance is used to convert the governmental funds to prepare the governmental activities portion of the entity-wide financial statements using the accrual basis of accounting and the economic resources measurement focus. Based on the fund type selected in the fund setup screen, the system will close the change in net assets and all fund balances accounts (unreserved, reserved for encumbrances, etc.) to unrestricted net assets (general fund), net assets restricted for other purposes (special revenue funds), net assets restricted for debt service (debt service funds), net assets restricted for capital outlay (capital projects funds), or net assets restricted – nonexpendable (permanent funds).
The Full Accrual Trial Balance is used to prepare the fund financial statements for the proprietary funds (enterprise funds and internal service funds) and the fiduciary funds. It is also used to prepare the enterprise funds for entity-wide financial reporting (internal service fund allocations, eliminations, and internal balances as well as other interfund eliminations that may be appropriate). The funds using the full accrual trial use the accrual basis of accounting and the economic resources measurement focus. Based on the fund type selected in the fund setup screen, the system will close the change in net assets to unrestricted net assets for the enterprise funds and the internal service funds and the following accounts for the fiduciary funds - net assets held in trust for pension benefits for pension trust funds, net assets held in trust for pool participants for investment trust funds, and net assets held in trust for scholarships for private purpose trust funds. Since agency funds have no net assets, the difference between additions and deductions is closed to undistributed monies (a liability account).
The Governmental Consolidation Trial Balance receives post closing (ending) balances for assets, liabilities and net assets from the governmental restricted net assets trial balances, from the general capital assets worksheet, and from the general debt consolidation worksheet. In addition to the post closing balances, the revenues and expenses roll to this trial to allow the preparation of the statement of activities.
The General Capital Assets Worksheet is used to prepare capital asset data for the governmental consolidation trial balance. This worksheet includes capital asset additions with the expenditure elimination, the deletions with the elimination of any proceeds and the recognition of any gain or loss on disposal, and depreciation expense. Net change in net assets from this worksheet closes to invested in capital assets, net of related debt.
The General Debt Consolidation Worksheet is used to prepare general long term debt data for the governmental consolidation trial balance. This worksheet includes general long term debt additions (debt issued) with the elimination of the proceeds (other financing source) as well as any premiums, discounts, bond issuance costs, or gain or loss on refunding as appropriate for the issues, payments with the elimination of the debt principal expenditures, amortization of premiums or discounts, amortization of deferred charges, amortization of gain or loss on refundings, and the accrual of interest payable. Net change in net assets from this worksheet closes to the net assets account, invested in capital assets, net of related debt. Again, we will need to understand this to develop appropriate entries so the system can properly report net assets with the appropriate amounts by net assets classification.
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