CGFM TEST 2 2025 QUESTIONS
AND ANSWERS
Governments exist to provide services - ANSWER-no profit motive, no single
measure of success
Primary funding source = - ANSWER-taxes (involuntary payments, because there
is no ability to match services to those who provide the resource)
Budget process = - ANSWER-primary control device in government
US Constitution provides two levels of government - ANSWER-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 - ANSWER-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 - ANSWER-public officials are accountable for the
extablishment of controls to ensure that transations are processed properly
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,2) Performance Accountability - ANSWER-acting in an efficient, effective, or
economic manner.
3) Fiscal Accountability - ANSWER-raising and allocation of resources to
accomplish objectives
4) Operational Accountability - ANSWER-stewardship of public resources
Which branch is accountable to whom? - ANSWER-Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - ANSWER-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 - ANSWER-* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - ANSWER-1) Legislators and oversight groups
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,2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
Need for financial reports - ANSWER-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 - ANSWER-provides current information as of the
date of the reports (e.g. balance sheet)
Period financial reports - ANSWER-reports the activity for an entire fiscal period
(month, year)
General Purpose External Financial Reports (GPEFR)/CAFR - ANSWER-1)
audited financial statements (including notes)
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, "basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
Special Purpose Financial Reports (may or may not be provided to external users) -
ANSWER-* budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - ANSWER-1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 4
AND ANSWERS
Governments exist to provide services - ANSWER-no profit motive, no single
measure of success
Primary funding source = - ANSWER-taxes (involuntary payments, because there
is no ability to match services to those who provide the resource)
Budget process = - ANSWER-primary control device in government
US Constitution provides two levels of government - ANSWER-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 - ANSWER-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 - ANSWER-public officials are accountable for the
extablishment of controls to ensure that transations are processed properly
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
,2) Performance Accountability - ANSWER-acting in an efficient, effective, or
economic manner.
3) Fiscal Accountability - ANSWER-raising and allocation of resources to
accomplish objectives
4) Operational Accountability - ANSWER-stewardship of public resources
Which branch is accountable to whom? - ANSWER-Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - ANSWER-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 - ANSWER-* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - ANSWER-1) Legislators and oversight groups
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
,2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
Need for financial reports - ANSWER-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 - ANSWER-provides current information as of the
date of the reports (e.g. balance sheet)
Period financial reports - ANSWER-reports the activity for an entire fiscal period
(month, year)
General Purpose External Financial Reports (GPEFR)/CAFR - ANSWER-1)
audited financial statements (including notes)
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 3
, "basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
Special Purpose Financial Reports (may or may not be provided to external users) -
ANSWER-* budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - ANSWER-1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 4
