CGFO Accounting and Financial
Reporting Exam Questions and Answers
What are the two most important financial documents in both public and private
organizations? - Answers -Budget and annual financial report.
What is the purpose of the accounting system? - Answers -To provide a record-keeping
framework in which to record (in journals) the transactions authorized by the budget and
to reconcile (in ledgers) their cumulative financial impact.
What are the six goals of accounting? - Answers -Provide financial information that is:
Understandable, reliable, relevant, comparable, consistent, and timely.
What are generally accepted accounting principles (GAAP)? - Answers -Standards
adopted by the accounting profession for recording and reporting transactions.
What is the role of the Governmental Accounting Standards Board (GASB)? - Answers -
To provide standards, interpretations, and technical bulletins for state and local
governments.
What did Statement 61 require for blending component units? - Answers -Financial
benefit or burden relationship or operational responsibility.
What is the purpose of GASB 68? - Answers -To establish standards for measuring and
recognizing liabilities, deferred outflows/inflows, and expenses.
What does GASB 68 address for defined benefit pensions? - Answers -Methods,
assumptions, and note disclosure requirements.
What does GASB 72 define? - Answers -Fair value and investment.
What are some topics of discussion concerning GAAP? - Answers -Basis of accounting,
treatment of fixed assets, and long-term debt.
What is one benefit of standardizing the accounting system? - Answers -Comparisons
can be made across governments and conclusions drawn on the relative financial
health of each.
,What is another benefit of standardizing the accounting system? - Answers -Users can
interpret financial reports more easily.
What is the most important benefit of standardizing the accounting system? - Answers -
Assuring users that a common set of rules is being applied to reporting financial
operations.
What is the purpose of the operating budget? - Answers -To plan for spending and
expected revenues.
What is the purpose of the capital budget? - Answers -To plan for spending on long-
term assets.
What is the purpose of the accounting system? - Answers -To record financial
transactions authorized by the budget.
What is the purpose of journals in the accounting system? - Answers -To record
transactions.
What is the purpose of ledgers in the accounting system? - Answers -To reconcile the
cumulative financial impact of transactions.
What is the role of generally accepted accounting principles (GAAP)? - Answers -To
guide the recording, reconciling, and reporting of transactions.
What is GAAP? - Answers -Generally Accepted Accounting Principles
What are the goals of GAAP? - Answers -Accuracy, reliability, and consistency in
reporting
How do businesses and governments report their results differently? - Answers -
Businesses consolidate results, governments report by funds
What is a fund in governmental accounting? - Answers -A fiscal and accounting entity
with a self-balancing set of accounts
How do funds function in governmental accounting? - Answers -Like self-contained
businesses with their own accounts and financial reports
What is Principle #1 of governmental accounting? - Answers -Maintain accounts on a
GAAP basis and comply with finance-related legal requirements
What is Principle #2 of governmental accounting? - Answers -Funds must be the basis
for maintaining accounting records
, What is Principle #3 of governmental accounting? - Answers -Identify and define the
eleven basic types of funds used in governmental accounting
What is Principle #4 of governmental accounting? - Answers -Maintain a minimum
number of funds and only those required by law
What is Principle #5 of governmental accounting? - Answers -Maintain a distinction in
accounting records among capital assets of different funds
What is Principle #6 of governmental accounting? - Answers -Maintain historical cost of
capital assets and long-term debt in accounting records
What is Principle #7 of governmental accounting? - Answers -Record depreciation of
capital assets in accounting records
What is Principle #8 of governmental accounting? - Answers -Maintain a clear
distinction between long-term liabilities of specific funds and the general government
What is Principle #9 of governmental accounting? - Answers -Use accrual basis for
government-wide financial statements and modified accrual basis for fund-specific
financial statements
What is Principle #10? - Answers -Annual budget adoption and comparison with actual
results.
What is Principle #11? - Answers -Recognition and reporting of interfund transfers
depending on reciprocity.
What is Principle #12? - Answers -Use of common terminology and classification
system.
What is Principle #13? - Answers -Preparation of interim financial reports and CAFR
follows specified format.
What is the difference between accounting methods in government and private sector? -
Answers -Government uses modified accrual method for certain funds.
Why is governmental accounting more complex than private-sector accounting? -
Answers -Multiple funds and differential accounting bases.
How is a fund defined? - Answers -Fiscal entity with self-balancing accounts.
How can a fund be conceptually viewed? - Answers -Legal entity with inflows and
outflows of financial resources.
Reporting Exam Questions and Answers
What are the two most important financial documents in both public and private
organizations? - Answers -Budget and annual financial report.
What is the purpose of the accounting system? - Answers -To provide a record-keeping
framework in which to record (in journals) the transactions authorized by the budget and
to reconcile (in ledgers) their cumulative financial impact.
What are the six goals of accounting? - Answers -Provide financial information that is:
Understandable, reliable, relevant, comparable, consistent, and timely.
What are generally accepted accounting principles (GAAP)? - Answers -Standards
adopted by the accounting profession for recording and reporting transactions.
What is the role of the Governmental Accounting Standards Board (GASB)? - Answers -
To provide standards, interpretations, and technical bulletins for state and local
governments.
What did Statement 61 require for blending component units? - Answers -Financial
benefit or burden relationship or operational responsibility.
What is the purpose of GASB 68? - Answers -To establish standards for measuring and
recognizing liabilities, deferred outflows/inflows, and expenses.
What does GASB 68 address for defined benefit pensions? - Answers -Methods,
assumptions, and note disclosure requirements.
What does GASB 72 define? - Answers -Fair value and investment.
What are some topics of discussion concerning GAAP? - Answers -Basis of accounting,
treatment of fixed assets, and long-term debt.
What is one benefit of standardizing the accounting system? - Answers -Comparisons
can be made across governments and conclusions drawn on the relative financial
health of each.
,What is another benefit of standardizing the accounting system? - Answers -Users can
interpret financial reports more easily.
What is the most important benefit of standardizing the accounting system? - Answers -
Assuring users that a common set of rules is being applied to reporting financial
operations.
What is the purpose of the operating budget? - Answers -To plan for spending and
expected revenues.
What is the purpose of the capital budget? - Answers -To plan for spending on long-
term assets.
What is the purpose of the accounting system? - Answers -To record financial
transactions authorized by the budget.
What is the purpose of journals in the accounting system? - Answers -To record
transactions.
What is the purpose of ledgers in the accounting system? - Answers -To reconcile the
cumulative financial impact of transactions.
What is the role of generally accepted accounting principles (GAAP)? - Answers -To
guide the recording, reconciling, and reporting of transactions.
What is GAAP? - Answers -Generally Accepted Accounting Principles
What are the goals of GAAP? - Answers -Accuracy, reliability, and consistency in
reporting
How do businesses and governments report their results differently? - Answers -
Businesses consolidate results, governments report by funds
What is a fund in governmental accounting? - Answers -A fiscal and accounting entity
with a self-balancing set of accounts
How do funds function in governmental accounting? - Answers -Like self-contained
businesses with their own accounts and financial reports
What is Principle #1 of governmental accounting? - Answers -Maintain accounts on a
GAAP basis and comply with finance-related legal requirements
What is Principle #2 of governmental accounting? - Answers -Funds must be the basis
for maintaining accounting records
, What is Principle #3 of governmental accounting? - Answers -Identify and define the
eleven basic types of funds used in governmental accounting
What is Principle #4 of governmental accounting? - Answers -Maintain a minimum
number of funds and only those required by law
What is Principle #5 of governmental accounting? - Answers -Maintain a distinction in
accounting records among capital assets of different funds
What is Principle #6 of governmental accounting? - Answers -Maintain historical cost of
capital assets and long-term debt in accounting records
What is Principle #7 of governmental accounting? - Answers -Record depreciation of
capital assets in accounting records
What is Principle #8 of governmental accounting? - Answers -Maintain a clear
distinction between long-term liabilities of specific funds and the general government
What is Principle #9 of governmental accounting? - Answers -Use accrual basis for
government-wide financial statements and modified accrual basis for fund-specific
financial statements
What is Principle #10? - Answers -Annual budget adoption and comparison with actual
results.
What is Principle #11? - Answers -Recognition and reporting of interfund transfers
depending on reciprocity.
What is Principle #12? - Answers -Use of common terminology and classification
system.
What is Principle #13? - Answers -Preparation of interim financial reports and CAFR
follows specified format.
What is the difference between accounting methods in government and private sector? -
Answers -Government uses modified accrual method for certain funds.
Why is governmental accounting more complex than private-sector accounting? -
Answers -Multiple funds and differential accounting bases.
How is a fund defined? - Answers -Fiscal entity with self-balancing accounts.
How can a fund be conceptually viewed? - Answers -Legal entity with inflows and
outflows of financial resources.
