CPA FAR governmental accounting
questions with correct answers.
What is the primary objective of governmental accounting? ANS - To provide information that is useful
and benefits a wide range of users including:
Costs of services provided
Sufficiency of revenues to cover costs
Financial position of entity
accrual basis accounting is used with (which focus) ANS - current economic resources focus: revenues
recognized when earned
modified accrual accounting is used with (which focus) ANS - current financial resources focus: revenues
recognized when available and measurable
What is a budget appropriation? ANS - The highest amount allowed for a particular expenditure under a
budget
What is an encumbrance? ANS - Records purchase and reserves it for the encumbrance.
What is the opening budgetary entry? ANS - Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
What is the closing budgetary entry? ANS - Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control
, operational accountability displayed in ANS - government-wide financial statements: effectiveness and
efficiency in use of resources
fiscal accountability displayed in ANS - fund financial statements: compliance in spending laws
CAFR sections ANS - 1. introductory (unaudited)
2. financial (auditor's report)
3. statistical
MD & A ANS - overview of government's financial activities
comparison to prior year
characteristics of primary government ANS - "SELF"
Separately Elected governing body
Legally separate
Fiscally independent of other government
discrete presentation of component units ANS - separate column in government-wide F/S: use if
activities are distinguishable from rest of governmental entity
blended presentation of component units ANS - use if activities cannot be identified and separated from
rest of governmental activities
accounting for government-wide financial statements ANS - 1. economic resources measurement
2. full accrual
3. includes all government activity except fiduciary
conditions for major fund reporting ANS - 1. total assets, liabilities, revenue, or expense of individual
fund = 10% of governmental or enterprise category
questions with correct answers.
What is the primary objective of governmental accounting? ANS - To provide information that is useful
and benefits a wide range of users including:
Costs of services provided
Sufficiency of revenues to cover costs
Financial position of entity
accrual basis accounting is used with (which focus) ANS - current economic resources focus: revenues
recognized when earned
modified accrual accounting is used with (which focus) ANS - current financial resources focus: revenues
recognized when available and measurable
What is a budget appropriation? ANS - The highest amount allowed for a particular expenditure under a
budget
What is an encumbrance? ANS - Records purchase and reserves it for the encumbrance.
What is the opening budgetary entry? ANS - Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
What is the closing budgetary entry? ANS - Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control
, operational accountability displayed in ANS - government-wide financial statements: effectiveness and
efficiency in use of resources
fiscal accountability displayed in ANS - fund financial statements: compliance in spending laws
CAFR sections ANS - 1. introductory (unaudited)
2. financial (auditor's report)
3. statistical
MD & A ANS - overview of government's financial activities
comparison to prior year
characteristics of primary government ANS - "SELF"
Separately Elected governing body
Legally separate
Fiscally independent of other government
discrete presentation of component units ANS - separate column in government-wide F/S: use if
activities are distinguishable from rest of governmental entity
blended presentation of component units ANS - use if activities cannot be identified and separated from
rest of governmental activities
accounting for government-wide financial statements ANS - 1. economic resources measurement
2. full accrual
3. includes all government activity except fiduciary
conditions for major fund reporting ANS - 1. total assets, liabilities, revenue, or expense of individual
fund = 10% of governmental or enterprise category
