CGFM CHAPTER 1 EXAM QUESTIONS
WITH CORRECT ANSWERS
For which of the following does general purpose financial reporting not assist users>
a. Assessing accountability
b. Making economic decisions
c. Making lease-purchase decisions
d. Making political decisions - Answer- C
Lease-purchase decisions are based on specific requirements. Financial reporting does
not assist in lease-purchase decisions.
Program managers have little need for financial statements.
TRUE or FALSE - Answer- FALSE
Program managers focus on operations and delivery of services. Managers also review
financial statements to ensure they are operating within budgetary parameters, legal
restrictions and public policy.
Describe the types of reports produced by governments. - Answer- General purpose
external financial reports demonstrating accountability and containing audited financial
statements as well as other required supplemental information
Internal financial reports to manage operations, reports to grantor agencies, offering
statements (debt issuance), project reports, popular reports.
Performance reports many of which aren't financial in nature.
Ensuring an accounting principle is used from one year to another is an example of
what financial reporting characteristic:
a. Reliability
b. Comparability
c. Consistency
d. Relevance - Answer- C
Reliability means information is verifiable and free from bias.
Comparability means that like entities report the same information in the same way.
Relevance means the information can be used to assess a condition, event or problem.
Before financial reports are completed, all information pertaining to financial
considerations and results of operation should be available.
TRUE or FALSE - Answer- FALSE
In order to issue reports in a timely manner, it may be necessary to make estimates. If
reports aren't issued in a timely manner, they can't be useful in decision-making.
, Describe the jurisdiction of the accounting standards-settings organizations. - Answer-
FASB: private sector, including not-for-profit
FASAB: federal government
GASB: non-federal governmental entities.
State and local governments never have to follow standards of the Financial Accounting
Standards Board.
TRUE or FALSE - Answer- TRUE
During due process, a standards-setting board may or may not take a position. For each
of the following due process documents, state whether or not a position has been taken.
a. Exposure draft
b. Discussion memorandum
c. Preliminary views
d. Invitation to comment - Answer- a. POSITION
b. No position
c. POSITION
d. No position
Which basis of accounting cannot be used to demonstrate the concept of interperiod
equality?
a. Cash basis
b. Accrual basis
c. Modified accrual basis - Answer- a. NO
b. YES
c. YES
Cash basis cannot be used because transactions are recorded only based on the
inflows and outflows of cash. The period in which the revenue was earned or liability
incurred is not taken into consideration.
resources for government entities are derived primarily from.... - Answer- taxes
involuntary resource providers...... - Answer- pay the taxes which provide services for
others paying little or no taxes
because those who are receiving the majority of services aren't the ones paying the
taxes, the government is pressured to..... - Answer- keep taxes as low as possible
other than taxes, governments primarily receive revenue from.... - Answer- grants and
shared revenues
governments recover at least some of the cost of providing certain services by
charging...... - Answer- user fees, licenses and permits
a cynic might say that one measure of a government's success is..... - Answer- the re-
election of it's officials
WITH CORRECT ANSWERS
For which of the following does general purpose financial reporting not assist users>
a. Assessing accountability
b. Making economic decisions
c. Making lease-purchase decisions
d. Making political decisions - Answer- C
Lease-purchase decisions are based on specific requirements. Financial reporting does
not assist in lease-purchase decisions.
Program managers have little need for financial statements.
TRUE or FALSE - Answer- FALSE
Program managers focus on operations and delivery of services. Managers also review
financial statements to ensure they are operating within budgetary parameters, legal
restrictions and public policy.
Describe the types of reports produced by governments. - Answer- General purpose
external financial reports demonstrating accountability and containing audited financial
statements as well as other required supplemental information
Internal financial reports to manage operations, reports to grantor agencies, offering
statements (debt issuance), project reports, popular reports.
Performance reports many of which aren't financial in nature.
Ensuring an accounting principle is used from one year to another is an example of
what financial reporting characteristic:
a. Reliability
b. Comparability
c. Consistency
d. Relevance - Answer- C
Reliability means information is verifiable and free from bias.
Comparability means that like entities report the same information in the same way.
Relevance means the information can be used to assess a condition, event or problem.
Before financial reports are completed, all information pertaining to financial
considerations and results of operation should be available.
TRUE or FALSE - Answer- FALSE
In order to issue reports in a timely manner, it may be necessary to make estimates. If
reports aren't issued in a timely manner, they can't be useful in decision-making.
, Describe the jurisdiction of the accounting standards-settings organizations. - Answer-
FASB: private sector, including not-for-profit
FASAB: federal government
GASB: non-federal governmental entities.
State and local governments never have to follow standards of the Financial Accounting
Standards Board.
TRUE or FALSE - Answer- TRUE
During due process, a standards-setting board may or may not take a position. For each
of the following due process documents, state whether or not a position has been taken.
a. Exposure draft
b. Discussion memorandum
c. Preliminary views
d. Invitation to comment - Answer- a. POSITION
b. No position
c. POSITION
d. No position
Which basis of accounting cannot be used to demonstrate the concept of interperiod
equality?
a. Cash basis
b. Accrual basis
c. Modified accrual basis - Answer- a. NO
b. YES
c. YES
Cash basis cannot be used because transactions are recorded only based on the
inflows and outflows of cash. The period in which the revenue was earned or liability
incurred is not taken into consideration.
resources for government entities are derived primarily from.... - Answer- taxes
involuntary resource providers...... - Answer- pay the taxes which provide services for
others paying little or no taxes
because those who are receiving the majority of services aren't the ones paying the
taxes, the government is pressured to..... - Answer- keep taxes as low as possible
other than taxes, governments primarily receive revenue from.... - Answer- grants and
shared revenues
governments recover at least some of the cost of providing certain services by
charging...... - Answer- user fees, licenses and permits
a cynic might say that one measure of a government's success is..... - Answer- the re-
election of it's officials
