CGFO Accounting and Financial Reporting
Exam Questions with Answers
What are the two most important financial documents in both public and
private organizations? - -Budget and annual financial report.
- What is the purpose of the accounting system? - -To provide a record-
keeping framework in which to record (in journals) the transactions
authorized by the budget and to reconcile (in ledgers) their cumulative
financial impact.
- What are the six goals of accounting? - -Provide financial information that
is: Understandable, reliable, relevant, comparable, consistent, and timely.
- What are generally accepted accounting principles (GAAP)? - -Standards
adopted by the accounting profession for recording and reporting
transactions.
- What is the role of the Governmental Accounting Standards Board (GASB)?
- -To provide standards, interpretations, and technical bulletins for state and
local governments.
- What are some topics of discussion concerning GAAP? - -Basis of
accounting, treatment of fixed assets, and long-term debt.
- What is one benefit of standardizing the accounting system? - -
Comparisons can be made across governments and conclusions drawn on
the relative financial health of each.
- What is another benefit of standardizing the accounting system? - -Users
can interpret financial reports more easily.
- What is the most important benefit of standardizing the accounting
system? - -Assuring users that a common set of rules is being applied to
reporting financial operations.
- What is the purpose of the operating budget? - -To plan for spending and
expected revenues.
- What is the purpose of the capital budget? - -To plan for spending on long-
term assets.
- What is the purpose of the accounting system? - -To record financial
transactions authorized by the budget.
, - What is the purpose of journals in the accounting system? - -To record
transactions.
- What is the purpose of ledgers in the accounting system? - -To reconcile
the cumulative financial impact of transactions.
- What is the role of generally accepted accounting principles (GAAP)? - -To
guide the recording, reconciling, and reporting of transactions.
- What is GAAP? - -Generally Accepted Accounting Principles
- What are the goals of GAAP? - -Accuracy, reliability, and consistency in
reporting
- How do businesses and governments report their results differently? - -
Businesses consolidate results, governments report by funds
- What is a fund in governmental accounting? - -A fiscal and accounting
entity with a self-balancing set of accounts
- How do funds function in governmental accounting? - -Like self-contained
businesses with their own accounts and financial reports
- What is Principle #1 of governmental accounting? - -Maintain accounts on
a GAAP basis and comply with finance-related legal requirements
- What is Principle #2 of governmental accounting? - -Funds must be the
basis for maintaining accounting records
- What is Principle #3 of governmental accounting? - -Identify and define
the eleven basic types of funds used in governmental accounting
- What is Principle #4 of governmental accounting? - -Maintain a minimum
number of funds and only those required by law
- What is Principle #5 of governmental accounting? - -Maintain a distinction
in accounting records among capital assets of different funds
- What is Principle #6 of governmental accounting? - -Maintain historical
cost of capital assets and long-term debt in accounting records
- What is Principle #7 of governmental accounting? - -Record depreciation
of capital assets in accounting records
, - What is Principle #8 of governmental accounting? - -Maintain a clear
distinction between long-term liabilities of specific funds and the general
government
- What is Principle #9 of governmental accounting? - -Use accrual basis for
government-wide financial statements and modified accrual basis for fund-
specific financial statements
- What is Principle #10? - -Annual budget adoption and comparison with
actual results.
- What is Principle #11? - -Recognition and reporting of interfund transfers
depending on reciprocity.
- What is Principle #12? - -Use of common terminology and classification
system.
- What is Principle #13? - -Preparation of interim financial reports and CAFR
follows specified format.
- What is the difference between accounting methods in government and
private sector? - -Government uses modified accrual method for certain
funds.
- Why is governmental accounting more complex than private-sector
accounting? - -Multiple funds and differential accounting bases.
- How is a fund defined? - -Fiscal entity with self-balancing accounts.
- How can a fund be conceptually viewed? - -Legal entity with inflows and
outflows of financial resources.
- What happens when inflows exceed outflows in a fund? - -Fund
accumulates a balance.
- What happens when there is a net outflow in a fund? - -Reduction in fund
balance.
- Where do funds receive revenue from? - -Different sources.
- How are funds typically created? - -By law or executive fiat.
- How many funds can a government have? - -Anywhere from less than 10
to several hundred.
Exam Questions with Answers
What are the two most important financial documents in both public and
private organizations? - -Budget and annual financial report.
- What is the purpose of the accounting system? - -To provide a record-
keeping framework in which to record (in journals) the transactions
authorized by the budget and to reconcile (in ledgers) their cumulative
financial impact.
- What are the six goals of accounting? - -Provide financial information that
is: Understandable, reliable, relevant, comparable, consistent, and timely.
- What are generally accepted accounting principles (GAAP)? - -Standards
adopted by the accounting profession for recording and reporting
transactions.
- What is the role of the Governmental Accounting Standards Board (GASB)?
- -To provide standards, interpretations, and technical bulletins for state and
local governments.
- What are some topics of discussion concerning GAAP? - -Basis of
accounting, treatment of fixed assets, and long-term debt.
- What is one benefit of standardizing the accounting system? - -
Comparisons can be made across governments and conclusions drawn on
the relative financial health of each.
- What is another benefit of standardizing the accounting system? - -Users
can interpret financial reports more easily.
- What is the most important benefit of standardizing the accounting
system? - -Assuring users that a common set of rules is being applied to
reporting financial operations.
- What is the purpose of the operating budget? - -To plan for spending and
expected revenues.
- What is the purpose of the capital budget? - -To plan for spending on long-
term assets.
- What is the purpose of the accounting system? - -To record financial
transactions authorized by the budget.
, - What is the purpose of journals in the accounting system? - -To record
transactions.
- What is the purpose of ledgers in the accounting system? - -To reconcile
the cumulative financial impact of transactions.
- What is the role of generally accepted accounting principles (GAAP)? - -To
guide the recording, reconciling, and reporting of transactions.
- What is GAAP? - -Generally Accepted Accounting Principles
- What are the goals of GAAP? - -Accuracy, reliability, and consistency in
reporting
- How do businesses and governments report their results differently? - -
Businesses consolidate results, governments report by funds
- What is a fund in governmental accounting? - -A fiscal and accounting
entity with a self-balancing set of accounts
- How do funds function in governmental accounting? - -Like self-contained
businesses with their own accounts and financial reports
- What is Principle #1 of governmental accounting? - -Maintain accounts on
a GAAP basis and comply with finance-related legal requirements
- What is Principle #2 of governmental accounting? - -Funds must be the
basis for maintaining accounting records
- What is Principle #3 of governmental accounting? - -Identify and define
the eleven basic types of funds used in governmental accounting
- What is Principle #4 of governmental accounting? - -Maintain a minimum
number of funds and only those required by law
- What is Principle #5 of governmental accounting? - -Maintain a distinction
in accounting records among capital assets of different funds
- What is Principle #6 of governmental accounting? - -Maintain historical
cost of capital assets and long-term debt in accounting records
- What is Principle #7 of governmental accounting? - -Record depreciation
of capital assets in accounting records
, - What is Principle #8 of governmental accounting? - -Maintain a clear
distinction between long-term liabilities of specific funds and the general
government
- What is Principle #9 of governmental accounting? - -Use accrual basis for
government-wide financial statements and modified accrual basis for fund-
specific financial statements
- What is Principle #10? - -Annual budget adoption and comparison with
actual results.
- What is Principle #11? - -Recognition and reporting of interfund transfers
depending on reciprocity.
- What is Principle #12? - -Use of common terminology and classification
system.
- What is Principle #13? - -Preparation of interim financial reports and CAFR
follows specified format.
- What is the difference between accounting methods in government and
private sector? - -Government uses modified accrual method for certain
funds.
- Why is governmental accounting more complex than private-sector
accounting? - -Multiple funds and differential accounting bases.
- How is a fund defined? - -Fiscal entity with self-balancing accounts.
- How can a fund be conceptually viewed? - -Legal entity with inflows and
outflows of financial resources.
- What happens when inflows exceed outflows in a fund? - -Fund
accumulates a balance.
- What happens when there is a net outflow in a fund? - -Reduction in fund
balance.
- Where do funds receive revenue from? - -Different sources.
- How are funds typically created? - -By law or executive fiat.
- How many funds can a government have? - -Anywhere from less than 10
to several hundred.
