CGFM Exam 2 2026 correct answers
I 1.The Defense Logistics Agency holds jet fuel as inventory, which it sells to support flight
operations. The table on the left provides beginning/ending fiscal year 2017 inventory levels
and purchase information. Assuming the agency uses the FIFO inventory valuation method,
what was the cost of goods sold for jet fuel in fiscal year 2017? - correct answers Correct
Answer: $133.50
I 2.In financial reporting, consistency of communication means - correct answers Correct
Answer: if accounting principles have changed or if the financial reporting entity has changed,
the nature and reason for the change, as well as the effect of the change, should be disclosed.
I 3.Budgeting is an element of which policy? - correct answers Correct Answer: fiscal
I 4.Another term for the federal government baseline budget is - correct answers Correct
Answer: a current level of service budget.
I 5.As described by FASAB, the four groups of people to whom the government is accountable
and are, therefore, potential users of federal financial statements are - correct answers Correct
Answer: citizens, Congress, executives, and program managers.
I 6.When establishing an allowance for doubtful accounts, the journal entry required is a debit
to - correct answers Correct Answer: Bad Debts Expense and a credit to the Allowance for
Doubtful Accounts.
I 7.Street resurfacing is a type of which budget element? - correct answers Correct Answer:
program
,I 8.Which of the following is a correct accounting entry when one government agency receives a
grant from another government agency? - correct answers Correct Answer: The grantor agency
recognizes liability and the recipient agency recognizes non-exchange revenue when the
recipient agency meets all eligibility requirements.
I 9.Which of the following sources of accounting principles is at the top of the GASB hierarchy? -
correct answers Correct Answer: Generally Accepted Accounting Principles
I 10.The role of the International Public Sector Accounting Standards Board is to - correct
answers Correct Answer: set standards for the general purpose financial statements of
international public sector entities.
I 11.A state needs to determine its indirect cost rate for fringe benefits as a function of direct
salaries costs of $3 million. Based on the information shown on the left, the indirect cost is -
correct answers Correct Answer: 10.8%
I 12.Non-exchange revenue includes inflows of resources arising from - correct answers Correct
Answer: taxes, fines and penalties from the private sector.
I 13.A group of activities within a function are known as - correct answers Correct Answer: a
program.
I 14.In financing capital projects, special assessments are used to ensure that - correct answers
Correct Answer: the individuals benefiting from the project are the ones who pay for it.
I 15.The organizations that establish the standards used by their constituents for external
reporting purposes include FASB, FASAB, GASB and - correct answers Correct Answer:
International Public Sector Accounting Standards Board.
I 16.Which of the following terms describes costs an agency incurs on behalf of another agency?
- correct answers Correct Answer: inter-entity
, I 17.State and local governments need cost information to receive reimbursements for
allowable costs for federal grants, while federal agencies are required to have cost accounting
concepts in the preparation of what type of statements? - correct answers Correct Answer:
financial statements
I 18.State and local governments use encumbrances as the major budgetary control tool to
ensure availability of funds prior to entering agreements, while the federal government instills
budgetary control using - correct answers Correct Answer: commitments and obligations.
I 19.The equipment department of a municipality rents out equipment to other departments
and wants to set a fee that will recover expenses. The department estimates 10,000 rentals per
year, with the annual operating costs shown on the left. The department has $5,000 in annual
interest payments and $15,000 in annual debt service payments for the loan they took out to
purchase the equipment. The annual depreciation on the equipment is $7,500. Based on this
information, the user fee should be set at - correct answers Correct Answer: $91.25 per rental.
I 20.Apportionments and allotments are used by agencies to ensure - correct answers Correct
Answer: that outlays do not exceed appropriations.
I 21.Departments and agencies submit their apportionment requests for future expenditures
during which budget phase? - correct answers Correct Answer: execution
I 22.Which element of the budget structure is represented by license and permit revenue? -
correct answers Correct Answer: category or source
I 23.Agencies generally submit their budget requests during the - correct answers Correct
Answer: budget preparation phase.
I 24.In United States governments, what is the cornerstone of financial reporting? - correct
answers Correct Answer: accountability
I 1.The Defense Logistics Agency holds jet fuel as inventory, which it sells to support flight
operations. The table on the left provides beginning/ending fiscal year 2017 inventory levels
and purchase information. Assuming the agency uses the FIFO inventory valuation method,
what was the cost of goods sold for jet fuel in fiscal year 2017? - correct answers Correct
Answer: $133.50
I 2.In financial reporting, consistency of communication means - correct answers Correct
Answer: if accounting principles have changed or if the financial reporting entity has changed,
the nature and reason for the change, as well as the effect of the change, should be disclosed.
I 3.Budgeting is an element of which policy? - correct answers Correct Answer: fiscal
I 4.Another term for the federal government baseline budget is - correct answers Correct
Answer: a current level of service budget.
I 5.As described by FASAB, the four groups of people to whom the government is accountable
and are, therefore, potential users of federal financial statements are - correct answers Correct
Answer: citizens, Congress, executives, and program managers.
I 6.When establishing an allowance for doubtful accounts, the journal entry required is a debit
to - correct answers Correct Answer: Bad Debts Expense and a credit to the Allowance for
Doubtful Accounts.
I 7.Street resurfacing is a type of which budget element? - correct answers Correct Answer:
program
,I 8.Which of the following is a correct accounting entry when one government agency receives a
grant from another government agency? - correct answers Correct Answer: The grantor agency
recognizes liability and the recipient agency recognizes non-exchange revenue when the
recipient agency meets all eligibility requirements.
I 9.Which of the following sources of accounting principles is at the top of the GASB hierarchy? -
correct answers Correct Answer: Generally Accepted Accounting Principles
I 10.The role of the International Public Sector Accounting Standards Board is to - correct
answers Correct Answer: set standards for the general purpose financial statements of
international public sector entities.
I 11.A state needs to determine its indirect cost rate for fringe benefits as a function of direct
salaries costs of $3 million. Based on the information shown on the left, the indirect cost is -
correct answers Correct Answer: 10.8%
I 12.Non-exchange revenue includes inflows of resources arising from - correct answers Correct
Answer: taxes, fines and penalties from the private sector.
I 13.A group of activities within a function are known as - correct answers Correct Answer: a
program.
I 14.In financing capital projects, special assessments are used to ensure that - correct answers
Correct Answer: the individuals benefiting from the project are the ones who pay for it.
I 15.The organizations that establish the standards used by their constituents for external
reporting purposes include FASB, FASAB, GASB and - correct answers Correct Answer:
International Public Sector Accounting Standards Board.
I 16.Which of the following terms describes costs an agency incurs on behalf of another agency?
- correct answers Correct Answer: inter-entity
, I 17.State and local governments need cost information to receive reimbursements for
allowable costs for federal grants, while federal agencies are required to have cost accounting
concepts in the preparation of what type of statements? - correct answers Correct Answer:
financial statements
I 18.State and local governments use encumbrances as the major budgetary control tool to
ensure availability of funds prior to entering agreements, while the federal government instills
budgetary control using - correct answers Correct Answer: commitments and obligations.
I 19.The equipment department of a municipality rents out equipment to other departments
and wants to set a fee that will recover expenses. The department estimates 10,000 rentals per
year, with the annual operating costs shown on the left. The department has $5,000 in annual
interest payments and $15,000 in annual debt service payments for the loan they took out to
purchase the equipment. The annual depreciation on the equipment is $7,500. Based on this
information, the user fee should be set at - correct answers Correct Answer: $91.25 per rental.
I 20.Apportionments and allotments are used by agencies to ensure - correct answers Correct
Answer: that outlays do not exceed appropriations.
I 21.Departments and agencies submit their apportionment requests for future expenditures
during which budget phase? - correct answers Correct Answer: execution
I 22.Which element of the budget structure is represented by license and permit revenue? -
correct answers Correct Answer: category or source
I 23.Agencies generally submit their budget requests during the - correct answers Correct
Answer: budget preparation phase.
I 24.In United States governments, what is the cornerstone of financial reporting? - correct
answers Correct Answer: accountability
