CPFO - ACCOUNTING EXAM QUESTIONS & ANSWERS
Which of the following best describes the role that accounting, financial reporting, and
the financial statement audit play for state and local governments?
A. They compromise a comprehensive framework of internal control.
B. They provide the informational infrastructure of public finance.
C. They serve as a public-sector performance management system. - Answers - B.
They provide the informational infrastructure of public finance.
Who is primarily responsible for accounting?
A. The governing body
B. The independent auditor
C. Management - Answers - C. Management
Who is primarily responsible for financial reporting?
A. The governing body
B. The independent auditor
C. Management - Answers - C. Management
Which of the following best describes the relationship between accounting and financial
reporting?
A. The two terms are essentially interchangeable.
B. The two terms are complementary but distinct.
C. The two terms are unrelated. - Answers - B. The two terms are complementary but
distinct.
Which of the following may be a reporting unit, for which financial statement elements
are displayed?
A. An individual government
B. Two or more governments
C. A part of a government
D. Two or more parts of a government
E. All of the above - Answers - E. All of the above
Which of the following methods of communication focuses on providing an operational,
economic, or historical context?
A. Disclosure
B. Supporting Information
,C. Both A and B - Answers - B. Supporting Information
Which of the following is an essential characteristic of accounting data?
A. Precision
B. Comparability
C. Both A and B - Answers - B. Comparability
Who is ultimately responsible for a government's financial reporting?
A. The independent auditor
B. Management
C. The governing body - Answers - C. The governing body
GAAP provides authoritative guidance for which of the following?
A. Internal financial reporting
B. Special purpose external financial reporting
C. General Purpose external financial reporting
D. All of the above - Answers - C. General Purpose external financial reporting
Which of the following is not properly considered to be a primary user of state and local
government financial statements?
A. Investors and creditors
B. Managers
C. Legislative and oversight bodies
D. None of the above - Answers - B. Managers
Which of the following is always issues as part of the GASB's due process?
A. Invitation to comment (ITC)
B. Discussion memorandum (DM)
C. Preliminary views (PV)
D. None of the above - Answers - D. None of the above
What determines the content and format of internal financial reports?
A. Generally accepted accounting principles
B. Management's needs and preferences
C. Both A and B - Answers - B. Management's needs and preferences
What typically determines the content and format of general purpose external financial
reports?
, A. Generally accepted accounting principles
B. Management's needs and preferences
C. Both A and B - Answers - A. Generally accepted accounting principles
Which of the following methods of communication would require that a given item meet
the definition of a financial statement element?
A. Display
B. Disclosure
C. Both A and B - Answers - A. Display
Which of the following has the highest status on the GAAP hierarchy for state and local
governments?
A. NCGA statement
B. GASB implementation guide
C. AICPA statement of position specific to government and cleared by the GASB
D. AICPA issues paper - Answers - A. NCGA statement
Which of the following would not be covered by either the AICPA Compliance with
Standards Rule, Code section 1.310.001, or Accounting Principles Rule, Code section
1.320.001?
A. GASB implementation guide
B. GASB Statements
C. Widely recognized and prevalent practice
D. All of the above are covered by one of those rules - Answers - C. Widely recognized
and prevalent practice
Which of the following is a true statement regarding the application of nonauthoritative
accounting literature:
A. If there is no category A or B GAAP applicable to a government's situation, it should
follow guidance applicable to not-for-profit organizations in similar situations.
B. If a government identifies at least 10 other governments that for a particular
accounting convention, that is sufficient to assume that the practice is widely recognized
and prevalent.
C. A government would never follow the accounting practices found in an accounting
journal if there is a pronouncement of another accounting standards board that provides
conflicting guidance.
D. Governments should always assess whether the guidance found in any
nonauthoritative accounting literature is consistent with GASB's concepts statements.
E. C and D - Answers - D. Governments should always assess whether the guidance
found in any nonauthoritative accounting literature is consistent with GASB's concepts
statements.
Which of the following best describes the role that accounting, financial reporting, and
the financial statement audit play for state and local governments?
A. They compromise a comprehensive framework of internal control.
B. They provide the informational infrastructure of public finance.
C. They serve as a public-sector performance management system. - Answers - B.
They provide the informational infrastructure of public finance.
Who is primarily responsible for accounting?
A. The governing body
B. The independent auditor
C. Management - Answers - C. Management
Who is primarily responsible for financial reporting?
A. The governing body
B. The independent auditor
C. Management - Answers - C. Management
Which of the following best describes the relationship between accounting and financial
reporting?
A. The two terms are essentially interchangeable.
B. The two terms are complementary but distinct.
C. The two terms are unrelated. - Answers - B. The two terms are complementary but
distinct.
Which of the following may be a reporting unit, for which financial statement elements
are displayed?
A. An individual government
B. Two or more governments
C. A part of a government
D. Two or more parts of a government
E. All of the above - Answers - E. All of the above
Which of the following methods of communication focuses on providing an operational,
economic, or historical context?
A. Disclosure
B. Supporting Information
,C. Both A and B - Answers - B. Supporting Information
Which of the following is an essential characteristic of accounting data?
A. Precision
B. Comparability
C. Both A and B - Answers - B. Comparability
Who is ultimately responsible for a government's financial reporting?
A. The independent auditor
B. Management
C. The governing body - Answers - C. The governing body
GAAP provides authoritative guidance for which of the following?
A. Internal financial reporting
B. Special purpose external financial reporting
C. General Purpose external financial reporting
D. All of the above - Answers - C. General Purpose external financial reporting
Which of the following is not properly considered to be a primary user of state and local
government financial statements?
A. Investors and creditors
B. Managers
C. Legislative and oversight bodies
D. None of the above - Answers - B. Managers
Which of the following is always issues as part of the GASB's due process?
A. Invitation to comment (ITC)
B. Discussion memorandum (DM)
C. Preliminary views (PV)
D. None of the above - Answers - D. None of the above
What determines the content and format of internal financial reports?
A. Generally accepted accounting principles
B. Management's needs and preferences
C. Both A and B - Answers - B. Management's needs and preferences
What typically determines the content and format of general purpose external financial
reports?
, A. Generally accepted accounting principles
B. Management's needs and preferences
C. Both A and B - Answers - A. Generally accepted accounting principles
Which of the following methods of communication would require that a given item meet
the definition of a financial statement element?
A. Display
B. Disclosure
C. Both A and B - Answers - A. Display
Which of the following has the highest status on the GAAP hierarchy for state and local
governments?
A. NCGA statement
B. GASB implementation guide
C. AICPA statement of position specific to government and cleared by the GASB
D. AICPA issues paper - Answers - A. NCGA statement
Which of the following would not be covered by either the AICPA Compliance with
Standards Rule, Code section 1.310.001, or Accounting Principles Rule, Code section
1.320.001?
A. GASB implementation guide
B. GASB Statements
C. Widely recognized and prevalent practice
D. All of the above are covered by one of those rules - Answers - C. Widely recognized
and prevalent practice
Which of the following is a true statement regarding the application of nonauthoritative
accounting literature:
A. If there is no category A or B GAAP applicable to a government's situation, it should
follow guidance applicable to not-for-profit organizations in similar situations.
B. If a government identifies at least 10 other governments that for a particular
accounting convention, that is sufficient to assume that the practice is widely recognized
and prevalent.
C. A government would never follow the accounting practices found in an accounting
journal if there is a pronouncement of another accounting standards board that provides
conflicting guidance.
D. Governments should always assess whether the guidance found in any
nonauthoritative accounting literature is consistent with GASB's concepts statements.
E. C and D - Answers - D. Governments should always assess whether the guidance
found in any nonauthoritative accounting literature is consistent with GASB's concepts
statements.
