CGFM TEST 2 questions with complete solutions rated A+ Passed

CGFM TEST 2 questions with complete solutions rated A+ PassedGovernments exist to provide services no profit motive, no single measure of success Primary funding source = taxes (involuntary payments, because there is no ability to match services to those who provide the resource) Budget process = primary control device in government US Constitution provides two levels of government Federal and State State consitituions similar in that each defines the excutive and legislative braches, establishes political offices, and defines how local governments can be formed. Government Accountability based on the belief that the government has a responsibility to report, the public has a right to know, andthe ultimate power belongs to the people. 1) Legal Accountability public officials are accountable for the extablishment of controls to ensure that transations are processed properly 2) Performance Accountability acting in an efficient, effective, or economic manner. 3) Fiscal Accountability raising and allocation of resources to accomplish objectives 4) Operational Accountability stewardship of public resources Which branch is accountable to whom? Legislative -- to the public Executive -- to legislative and public as well as other governments Interperiod Equity current generation of citizens should not be able to shift the burden of paying for current-year services to future taxpayers balanced budget law = current year services must be financed with current year revenues (problem is financial data can be manipulated to achieve this). Fed Gov't not subject to this. Laws prohibiting borrowing * only to meet cash flow needs * not for operating purposes * should match the useful life of capital assets Users of financial reports 1) Legislators and oversight groups 2) Citizens and taxpayers 3) Investors and Creditors 4) Media 5) Financial and Program managers 6) Employees and employee organizations Need for financial reports 1) primary communication device for assessing accountability 2) aid in decision making process (economic, social, and political) * planning and administration * results of operations * financial condition of the organization Point in time financial reports provides current information as of the date of the reports (e.g. balance sheet) Period financial reports reports the activity for an entire fiscal period (month, year)