CPFO Accounting Exam Questions
with Correct Detailed Answers
(Already Graded A+) 2024 Latest
Update
The SSAP should indicate that which of the following has been omitted from the
government-wide financial statements?
A. Entity-wide total columns
B. Fiduciary funds
C. Comparative data
D. All of the above - Answer-B - To avoid any potential confusion regarding the scope of
the government-wide presentations, the SSAP should disclose the omission of fiduciary
funds and fiduciary-type component units. (page 200) (chapter 11)
Which of the following is NOT a required disclosure in the SSAP?
A. A description of component units included within the financial reporting entity
B. Information on how to obtain the separately issued financial statements of
component units
C. A discussion of the criteria for including component units within the financial reporting
entity
D. Summary financial information on related organizations - Answer-D - GAAP require
that the SSAP provide the following information concerning the financial reporting entity:
1) description of the component units included within the financial reporting entity, 2)
description of the relationship between the component units and the primary
government, 3) description of the relationship between the component units and the
primary government, 3) discussion of the criteria for including component units within
the financial reporting entity 4) discussion of how component units are reported, and 5)
information on how to obtain the separately issued financial statements of component
units. (page 200) (chapter 11)
For which of the following columns is a generic rather than a specific description
required?
A. General fund
B. Major funds
C. Fund type columns
D. A and C - Answer-A - In the case of the general fund, the columnar description may
be more or less generic. For other major funds, however, the description must be
,specific to the government's circumstances. SPecific descriptions also are required for
each of the fund-type columns reported in the basic fund financial statements. (page
201) (chapter 11)
Which of the following is not a required disclosure in the SSAP
A. Applicability of optional private-sector guidance to internal service funds
B. Flow assumption for restricted resources
C. Definition of cash and cash equivalents
D. Description of program revenues - Answer-A - Internal service funds do not have the
option of voluntarily applying private-sector guidance issued subsequent to the "cutoff
date" of November 30, 1989; therefore, there is no need to disclose the "option"
selected, as would be the case for enterprise funds. (page 203) (chapter 11)
Which of the following budgetary disclosures would be reported in the notes to the
financial statements even if budgetary comparisons were presented as RSI?
A. Budgetary expenditures in excess of appropriations
B. Material violations
C. Basis of budgeting
D. Reconciliation between the basis of budgeting and GAAP - Answer-B - Whenever
budgwetary comparisons are presented as required supplementary information (RSI)
rather than as a basic governmental fund financial statement, most related disclosures
would be reported as notes to RSI rather than as part of the notes to the financial
statements. The disclosure of material violations, on the other hand, would always be
included in the notes to the financial statements. (page 205-206) (chapter 11)
Which amount should be used when evaluating custodial credit risk for deposits?
A. Book balance
B. Bank balance
C. A or B
D. None of the above - Answer-B - for purposes of disclosing custodial credit risk, the
bank balance rather than the book balance is relevant. (page 208) (chapter 11)
Which of the following would NOT qualify as a cash deposit for purposes of evaluating
custodial credit risk disclosure?
A. Nonnegotiable certificates of deposit
B. Negotiable orders of withdrawal (NOW accounts)
C. Bank investment contracts
D. Guaranteed investment contracts - Answer-D - Cash deposits encompass negotiable
order of withdrawal (NOW) accounts, nonnegotiable certificates of deposit, and bank
investment contracts. Conversely, cash deposits do not encompass guaranteed
investment contracts or negotiable CDs. (page 208) (chapter 11)
To what extent are a government's deposits considered to be collateralized if a single-
institution collateral pool is used to secure those deposits?
A. Full collateralized
B. Uncollateralized
,C. Collateralized to the extent of the government's pro rata share of the pool's assets
D. Contingently collateralized - Answer-C - A government depositor should consider its
uninsured deposits to be collateralized only to the extent of its pro rata claim to a single-
insttution collateral pool's assets (page 208) (chapter 11)
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 - 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 - 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) - 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 - 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 - 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 - 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 - 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 - 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 - 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)
Which of the following BEST describes the purpose of GASB's "due process"
procedures?
A. Obtain approval for proposed guidance from key constituents
B. Persuade constituents of the soundness of proposed guidance
C. Permit oversight and regulatory bodies to veto or amend proposed guidance
D. Ensure the board has considered all relevant facts and points of view before issuing
final guidance - Answer-D - The purpose of due process is not to poll the board's
constituents regarding their preferences, but rather to ensure that the board has
considered all relevant facts and viewpoints before arriving at a conclusion. While the
GASB attaches greate importance to comments from interested parties in response to
due-process documents, the final decision on any issue reflects board members' own
best judgetment regarding the relative merits of the alternatives under consideration
(page 10) (Chapter 1)
with Correct Detailed Answers
(Already Graded A+) 2024 Latest
Update
The SSAP should indicate that which of the following has been omitted from the
government-wide financial statements?
A. Entity-wide total columns
B. Fiduciary funds
C. Comparative data
D. All of the above - Answer-B - To avoid any potential confusion regarding the scope of
the government-wide presentations, the SSAP should disclose the omission of fiduciary
funds and fiduciary-type component units. (page 200) (chapter 11)
Which of the following is NOT a required disclosure in the SSAP?
A. A description of component units included within the financial reporting entity
B. Information on how to obtain the separately issued financial statements of
component units
C. A discussion of the criteria for including component units within the financial reporting
entity
D. Summary financial information on related organizations - Answer-D - GAAP require
that the SSAP provide the following information concerning the financial reporting entity:
1) description of the component units included within the financial reporting entity, 2)
description of the relationship between the component units and the primary
government, 3) description of the relationship between the component units and the
primary government, 3) discussion of the criteria for including component units within
the financial reporting entity 4) discussion of how component units are reported, and 5)
information on how to obtain the separately issued financial statements of component
units. (page 200) (chapter 11)
For which of the following columns is a generic rather than a specific description
required?
A. General fund
B. Major funds
C. Fund type columns
D. A and C - Answer-A - In the case of the general fund, the columnar description may
be more or less generic. For other major funds, however, the description must be
,specific to the government's circumstances. SPecific descriptions also are required for
each of the fund-type columns reported in the basic fund financial statements. (page
201) (chapter 11)
Which of the following is not a required disclosure in the SSAP
A. Applicability of optional private-sector guidance to internal service funds
B. Flow assumption for restricted resources
C. Definition of cash and cash equivalents
D. Description of program revenues - Answer-A - Internal service funds do not have the
option of voluntarily applying private-sector guidance issued subsequent to the "cutoff
date" of November 30, 1989; therefore, there is no need to disclose the "option"
selected, as would be the case for enterprise funds. (page 203) (chapter 11)
Which of the following budgetary disclosures would be reported in the notes to the
financial statements even if budgetary comparisons were presented as RSI?
A. Budgetary expenditures in excess of appropriations
B. Material violations
C. Basis of budgeting
D. Reconciliation between the basis of budgeting and GAAP - Answer-B - Whenever
budgwetary comparisons are presented as required supplementary information (RSI)
rather than as a basic governmental fund financial statement, most related disclosures
would be reported as notes to RSI rather than as part of the notes to the financial
statements. The disclosure of material violations, on the other hand, would always be
included in the notes to the financial statements. (page 205-206) (chapter 11)
Which amount should be used when evaluating custodial credit risk for deposits?
A. Book balance
B. Bank balance
C. A or B
D. None of the above - Answer-B - for purposes of disclosing custodial credit risk, the
bank balance rather than the book balance is relevant. (page 208) (chapter 11)
Which of the following would NOT qualify as a cash deposit for purposes of evaluating
custodial credit risk disclosure?
A. Nonnegotiable certificates of deposit
B. Negotiable orders of withdrawal (NOW accounts)
C. Bank investment contracts
D. Guaranteed investment contracts - Answer-D - Cash deposits encompass negotiable
order of withdrawal (NOW) accounts, nonnegotiable certificates of deposit, and bank
investment contracts. Conversely, cash deposits do not encompass guaranteed
investment contracts or negotiable CDs. (page 208) (chapter 11)
To what extent are a government's deposits considered to be collateralized if a single-
institution collateral pool is used to secure those deposits?
A. Full collateralized
B. Uncollateralized
,C. Collateralized to the extent of the government's pro rata share of the pool's assets
D. Contingently collateralized - Answer-C - A government depositor should consider its
uninsured deposits to be collateralized only to the extent of its pro rata claim to a single-
insttution collateral pool's assets (page 208) (chapter 11)
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 - 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 - 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) - 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 - 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 - 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 - 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 - 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 - 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 - 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)
Which of the following BEST describes the purpose of GASB's "due process"
procedures?
A. Obtain approval for proposed guidance from key constituents
B. Persuade constituents of the soundness of proposed guidance
C. Permit oversight and regulatory bodies to veto or amend proposed guidance
D. Ensure the board has considered all relevant facts and points of view before issuing
final guidance - Answer-D - The purpose of due process is not to poll the board's
constituents regarding their preferences, but rather to ensure that the board has
considered all relevant facts and viewpoints before arriving at a conclusion. While the
GASB attaches greate importance to comments from interested parties in response to
due-process documents, the final decision on any issue reflects board members' own
best judgetment regarding the relative merits of the alternatives under consideration
(page 10) (Chapter 1)
