CGFM EXAM 2 2026 PUBLIC SECTOR
ACCOUNTING AND REPORTING ASSESSMENT
STUDY GUIDE COMPLETE QUESTIONS AND
ANSWERS
◉ 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 Answer:
Correct Answer: $91.25 per rental.
◉ I 20.Apportionments and allotments are used by agencies to
ensure Answer: Correct Answer: that outlays do not exceed
appropriations.
◉ I 21.Departments and agencies submit their apportionment
requests for future expenditures during which budget phase?
Answer: Correct Answer: execution
,◉ I 22.Which element of the budget structure is represented by
license and permit revenue? Answer: Correct Answer: category or
source
◉ I 23.Agencies generally submit their budget requests during the
Answer: Correct Answer: budget preparation phase.
◉ I 24.In United States governments, what is the cornerstone of
financial reporting? Answer: Correct Answer: accountability
◉ I 25.Unlike governments, businesses establish priorities for the
services and products they provide, based on the concept that
Answer: Correct Answer: shareholders provide financing and expect
the business goals and objectives to be profit-driven.
◉ I 26.Which is the preferred costing methodology? Answer: Correct
Answer: directly tracing costs wherever feasible and economically
practical
◉ I 27.Two agencies using the same accounting principles is an
example of Answer: Correct Answer: comparability.
◉ I 28.The function element of the budget refers to Answer: Correct
Answer: one of the major government service classifications.
, ◉ I 29.One purpose of the hierarchy of generally accepted
accounting principles for state, local, and federal accounting and
financial reporting is to Answer: Correct Answer: provide guidance
to preparers and attesters regarding accounting issues.
◉ I 30.All of the following factors should be considered when
choosing the method used to forecast revenues EXCEPT the Answer:
Correct Answer: complexity of the forecasting process.
◉ 31.Federal government-wide financial reporting allows the reader
to Answer: Correct Answer: assess the government's financial
condition and long-term sustainability.
◉ I 32.What action is allowable during the expired phase of federal
budget execution? Answer: Correct Answer: make upward
adjustments to obligations
◉ I 33.The concept that taxpayers of the current period should pay
for the services they receive rather than passing on the costs to the
taxpayers of subsequent periods is called Answer: Correct Answer:
interperiod equity.
◉ I 34.An agency is recommending a new program to the legislature.
Included with the information is a budgetary estimate, which
forecasts expenditures for the upcoming fiscal year, as well as the
next five years. The budget was determined by comparing the goals
ACCOUNTING AND REPORTING ASSESSMENT
STUDY GUIDE COMPLETE QUESTIONS AND
ANSWERS
◉ 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 Answer:
Correct Answer: $91.25 per rental.
◉ I 20.Apportionments and allotments are used by agencies to
ensure Answer: Correct Answer: that outlays do not exceed
appropriations.
◉ I 21.Departments and agencies submit their apportionment
requests for future expenditures during which budget phase?
Answer: Correct Answer: execution
,◉ I 22.Which element of the budget structure is represented by
license and permit revenue? Answer: Correct Answer: category or
source
◉ I 23.Agencies generally submit their budget requests during the
Answer: Correct Answer: budget preparation phase.
◉ I 24.In United States governments, what is the cornerstone of
financial reporting? Answer: Correct Answer: accountability
◉ I 25.Unlike governments, businesses establish priorities for the
services and products they provide, based on the concept that
Answer: Correct Answer: shareholders provide financing and expect
the business goals and objectives to be profit-driven.
◉ I 26.Which is the preferred costing methodology? Answer: Correct
Answer: directly tracing costs wherever feasible and economically
practical
◉ I 27.Two agencies using the same accounting principles is an
example of Answer: Correct Answer: comparability.
◉ I 28.The function element of the budget refers to Answer: Correct
Answer: one of the major government service classifications.
, ◉ I 29.One purpose of the hierarchy of generally accepted
accounting principles for state, local, and federal accounting and
financial reporting is to Answer: Correct Answer: provide guidance
to preparers and attesters regarding accounting issues.
◉ I 30.All of the following factors should be considered when
choosing the method used to forecast revenues EXCEPT the Answer:
Correct Answer: complexity of the forecasting process.
◉ 31.Federal government-wide financial reporting allows the reader
to Answer: Correct Answer: assess the government's financial
condition and long-term sustainability.
◉ I 32.What action is allowable during the expired phase of federal
budget execution? Answer: Correct Answer: make upward
adjustments to obligations
◉ I 33.The concept that taxpayers of the current period should pay
for the services they receive rather than passing on the costs to the
taxpayers of subsequent periods is called Answer: Correct Answer:
interperiod equity.
◉ I 34.An agency is recommending a new program to the legislature.
Included with the information is a budgetary estimate, which
forecasts expenditures for the upcoming fiscal year, as well as the
next five years. The budget was determined by comparing the goals
