CPFO Accounting Examination with 100% Correct Answers

CPFO Accounting Examination with 100% Correct Answers Which of the following groups normally would NOT be considered a primary user of state or local government's general-purpose external financial statements? A. Citizens B. Legislative and oversight bodies C. Management D. Investors and creditors - Correct Answer-C - The primary users of general-purpose external financial statements are those who, unlike management, do not have direct access to accounting information. (page 6) (Chapter 1) Which of the following groups took the lead in setting generally accepted accounting principles (GAAP) for business enterprises? A. Businesses themselves B. State governments C. Federal government D. Independent auditors - Correct Answer-D - Independent auditors took the lead in codifying GAAP in the private sector, whereas financial statement preparers took the lead in codifying GAAP in the public sector. (page 6) (Chapter 1) Which organization appoints the members of the Governmental Accounting Standards Board (GASB) A. Financial Accounting Foundation (FAF) B. Governmental Accounting Standards Advisory Council (GASAC) C. American Institute of Certified Public Accountants (AICPA) D. Securities and Exchange Commission (SEC) - Correct Answer-A - The FAF appoints the members of both the FASB and the GASB (page 7) (Chapter 1) Which of the following has the LOWEST authoritative status on the GAAP hierarchy? A. Widely recognized and prevalent practices B. NCGA interpretations C. GASB Concept Statements D. The AICPA's audit and accounting guide for State and Local Governments - Correct Answer-C - A GASB Concepts Statement is not part of the GAAP hierarchy as such, but rather constitutes an "other source" of GAAP. (page 14) (Chapter 1) Which of the following entities is NEVER subject to GASB jurisdiction? A. A hospital B. A college or university C. A utility D. None of the above - Correct Answer-D - In 1989, the FAF categorically affirmed the GASB's jurisdiction over all entities operating in the public sector, including utilities, hospitals, colleges, and universities (page 9) (Chapter 1) Which of the following types of guidance has the HIGHEST stand on the GAAP hierarchy A. GASB Technical Bulletins B. GASB Concept Statements C. GASB implementation Guides D. GASB Interpretations - Correct Answer-D - GASB Interpretations qualify as "level 1" GAAP on the GAAP hierarchy. (page 14) (Chapter 1) Which of the following statements is TRUE? A. Both the Financial Accounting Standards Board (FASB) and the GASB are supported in their work by advisory councils B. Both the FASB and the GASB have 7 members C. Both the FASB and the GASB can approve pronouncements by a simple majority vote D. All of the above - Correct Answer-D - All four statements are true. (page 7) (Chapter 1) Which of the following sets GAAP for nonprofit organizations? A. FAF B. AICPA C. GASB D. FASB - Correct Answer-D - The jurisdiction of the FASB covers both private-sector businesses and nonprofit organizations (page 8) (Chapter 1) Which of the following organizations has designated the GASB as the authoritative standard-setting body for state and local governments? A. FAF B. AICPA C. GAO D. SEC - Correct Answer-B - The AICPA, which represents the independent auditing profession, has officially designated the FASB, the GASB, and the FASAB as the authoritative standard-setting bodies for GAAP in their respective sectors. (page 9) (Chapter 1)