Blue Book Practice Exercises:
1,3,4,5,6,9,13,17 Questions and Answers
Graded A+
Which of the following best describes the role that accounting, financial reporting,
and the financial statement audit play for state and local governments? A.
Comprehensive framework of internal control B. Informational infrastructure of
public finance C. Public-sector performance management system - Correct answer-
B
Who is primarily responsible for accounting? A. Governing body B. Independent
auditor C. Management - Correct answer-C
Who is primarily responsible for financial reporting? A. Governing body B.
Independent auditor C. Management - Correct answer-C
Which best describes the relationship between accounting and financial reporting?
A. Interchangeable B. Complementary but distinct C. Unrelated - Correct answer-
B
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,What determines the content/format of internal financial reports? A. GAAP B.
Management's needs C. Both - Correct answer-B
What typically determines content/format of general purpose external financial
reports? A. GAAP B. Management's needs C. Both - Correct answer-A
Which communication requires that an item meet the definition of a financial
statement element? A. Display B. Disclosure C. Supporting Info - Correct answer-
A
Which may be a reporting unit for which financial statement elements are
displayed? A. Individual government B. Two or more governments C. Part of a
government D. Two or more parts of a government E. All of the above - Correct
answer-E
Which communication focuses on operational, economic, or historical context? A.
Disclosure B. Supporting info C. Both - Correct answer-B
Which is an essential characteristic of accounting data? A. Precision B.
Comparability C. Both - Correct answer-B
Who is ultimately responsible for a government's financial reporting? A. Auditor B.
Management C. Governing body - Correct answer-C
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, GAAP provides authoritative guidance for which of the following? A. Internal
financial reporting B. Special purpose external FR C. General purpose external FR
D. All - Correct answer-C
Which is not properly a primary user of SLG financial statements? A.
Investors/creditors B. Managers C. Legislative/oversight bodies D. None - Correct
answer-B (management is not a primary user)
Which is always issued in GASB due process? A. ITC B. DM C. PV D. None -
Correct answer-D
Which has the highest GAAP hierarchy status? A. NCGA statement B. GASB
implementation guide C. AICPA SOP (cleared by GASB) D. AICPA issues paper -
Correct answer-A
Which is not covered by AICPA Code sections 1.310.001 or 1.320.001? A. GASB
implementation guide B. GASB statements C. Widely recognized practice D. All
covered - Correct answer-C (widely recognized practice not in hierarchy)
True statement regarding nonauthoritative literature? A. Follow NFP if no Cat. A/B
GAAP B. If 10 govts follow, it's prevalent C. Journal guidance never if conflicts D.
Must be consistent with GASB concepts E. C and D - Correct answer-D (must be
consistent with GASB concepts)
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1,3,4,5,6,9,13,17 Questions and Answers
Graded A+
Which of the following best describes the role that accounting, financial reporting,
and the financial statement audit play for state and local governments? A.
Comprehensive framework of internal control B. Informational infrastructure of
public finance C. Public-sector performance management system - Correct answer-
B
Who is primarily responsible for accounting? A. Governing body B. Independent
auditor C. Management - Correct answer-C
Who is primarily responsible for financial reporting? A. Governing body B.
Independent auditor C. Management - Correct answer-C
Which best describes the relationship between accounting and financial reporting?
A. Interchangeable B. Complementary but distinct C. Unrelated - Correct answer-
B
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What determines the content/format of internal financial reports? A. GAAP B.
Management's needs C. Both - Correct answer-B
What typically determines content/format of general purpose external financial
reports? A. GAAP B. Management's needs C. Both - Correct answer-A
Which communication requires that an item meet the definition of a financial
statement element? A. Display B. Disclosure C. Supporting Info - Correct answer-
A
Which may be a reporting unit for which financial statement elements are
displayed? A. Individual government B. Two or more governments C. Part of a
government D. Two or more parts of a government E. All of the above - Correct
answer-E
Which communication focuses on operational, economic, or historical context? A.
Disclosure B. Supporting info C. Both - Correct answer-B
Which is an essential characteristic of accounting data? A. Precision B.
Comparability C. Both - Correct answer-B
Who is ultimately responsible for a government's financial reporting? A. Auditor B.
Management C. Governing body - Correct answer-C
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, GAAP provides authoritative guidance for which of the following? A. Internal
financial reporting B. Special purpose external FR C. General purpose external FR
D. All - Correct answer-C
Which is not properly a primary user of SLG financial statements? A.
Investors/creditors B. Managers C. Legislative/oversight bodies D. None - Correct
answer-B (management is not a primary user)
Which is always issued in GASB due process? A. ITC B. DM C. PV D. None -
Correct answer-D
Which has the highest GAAP hierarchy status? A. NCGA statement B. GASB
implementation guide C. AICPA SOP (cleared by GASB) D. AICPA issues paper -
Correct answer-A
Which is not covered by AICPA Code sections 1.310.001 or 1.320.001? A. GASB
implementation guide B. GASB statements C. Widely recognized practice D. All
covered - Correct answer-C (widely recognized practice not in hierarchy)
True statement regarding nonauthoritative literature? A. Follow NFP if no Cat. A/B
GAAP B. If 10 govts follow, it's prevalent C. Journal guidance never if conflicts D.
Must be consistent with GASB concepts E. C and D - Correct answer-D (must be
consistent with GASB concepts)
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