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CPFO Accounting Exam - GAAFR Review
Exam Questions And Answers |Latest 2025 |
Guaranteed Pass
1.1. Which of the following groups normally would not be considered a primary user of a state
or local government's general purpose external financial statements?
A. Citizens
B. Legislative & Oversight Bodies
C. Management
D. Investor & Creditors - Answer✔C. Management
Primary users of a state or local government's general purpose external financial statements
are citizens, legislative & oversight bodies, and investors & creditors. While Management is a
user, they have direct access to internal accounting information.
1.2. 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 governments
D. Independent auditors - Answer✔D. Independent Auditors
Independent auditors took the lead in setting GAAP in the private sector, whereas financial
statement preparers led the first efforts to define GAAP in the public sector.
1
, ©FYNDLAY 2025 ALL RIGHTS RESERVED 8:29 AM A+
1.3. 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 & Exchange Commission (SEC) - Answer✔A. Financial Accounting Foundation (FAF)
FAF appoints the members of both FASB & GASB.
1.4. Which of the following has the LOWEST authoritative status on the GAAP hierarchy?
A. Widely recognized and prevalent practices
B. NCGA Interpretations
C. GASB concepts statements
d. The AICPA's audit and accounting guide State and Local Governments - Answer✔C. GASB
Concepts Statements
GASB concepts statements are considered to be more authoritative than any other source of
guidance as they are included in "Other Sources" instead of an actual level of hierarchy.
1.5. 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. None of the above
In 1989, the FAF categorically affirmed the GASB's jurisdiction over all entitites operating in the
public sector, including utilities, hospitals, colleges, and universities.
2
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1.6. Which of the following Types of guidance has the HIGHEST standing on the GAAP
hierarchy?
A. GASB Technical Bulletins
B. GASB Concepts Statements
C. GASB Implementation Guides
D. GASB Interpretations - Answer✔D. GASB Interpretations
GASB Statements & Interpretations are listed as "Level 1" on the GAAP hierarchy.
1.7. 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 seven members
C. Both the FASB and the GASB can approve pronouncements by a simple majority vote.
D. All of the above - Answer✔D. All of the above
1.8. Which of the following sets GAAP for nonprofit organizations?
A. FAF
B. AICPA
C. GASB
D. FASB - Answer✔D. FASB
The jurisdiction of the FASB extends to both private-sector businesses and non-profit
organizations.
1.9. 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 (Government Accountability Office)
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D. SEC - Answer✔B. AICPA
The AICPA has officially designated the FASB, the GASB, and the FASAB as the authoritative
standard-setting bodies for GAAP in thier respective sectors.
1.10. 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. Ensure the board has considered all relevant facts and points of view
before issuing final guidance
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 points of view prior to
arriving at a conclusion.
1.11. Which of the following is NOT automatically proof that an entity should be classified as a
"state or local government" for purposes of the GAAP hierarchy?
A. The officers of the entity are popularly elected.
B. The entity has the power to enact and enforce a tax levy.
C. The entity has the ability to directly issue federally tax-exempt debt.
D. A government is able to unilaterally dissolve the entity, with the entity's net assets reverting
to the government. - Answer✔C. The entity has the ability to directly issue federally tax-exempt
debt.
The entity has the ability to directly issue federally tax-exempt debt (if this is the only criterion
met, the presumption that an entity is governmental may be rebutted based upon compelling,
relevant evidence).
4
CPFO Accounting Exam - GAAFR Review
Exam Questions And Answers |Latest 2025 |
Guaranteed Pass
1.1. Which of the following groups normally would not be considered a primary user of a state
or local government's general purpose external financial statements?
A. Citizens
B. Legislative & Oversight Bodies
C. Management
D. Investor & Creditors - Answer✔C. Management
Primary users of a state or local government's general purpose external financial statements
are citizens, legislative & oversight bodies, and investors & creditors. While Management is a
user, they have direct access to internal accounting information.
1.2. 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 governments
D. Independent auditors - Answer✔D. Independent Auditors
Independent auditors took the lead in setting GAAP in the private sector, whereas financial
statement preparers led the first efforts to define GAAP in the public sector.
1
, ©FYNDLAY 2025 ALL RIGHTS RESERVED 8:29 AM A+
1.3. 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 & Exchange Commission (SEC) - Answer✔A. Financial Accounting Foundation (FAF)
FAF appoints the members of both FASB & GASB.
1.4. Which of the following has the LOWEST authoritative status on the GAAP hierarchy?
A. Widely recognized and prevalent practices
B. NCGA Interpretations
C. GASB concepts statements
d. The AICPA's audit and accounting guide State and Local Governments - Answer✔C. GASB
Concepts Statements
GASB concepts statements are considered to be more authoritative than any other source of
guidance as they are included in "Other Sources" instead of an actual level of hierarchy.
1.5. 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. None of the above
In 1989, the FAF categorically affirmed the GASB's jurisdiction over all entitites operating in the
public sector, including utilities, hospitals, colleges, and universities.
2
, ©FYNDLAY 2025 ALL RIGHTS RESERVED 8:29 AM A+
1.6. Which of the following Types of guidance has the HIGHEST standing on the GAAP
hierarchy?
A. GASB Technical Bulletins
B. GASB Concepts Statements
C. GASB Implementation Guides
D. GASB Interpretations - Answer✔D. GASB Interpretations
GASB Statements & Interpretations are listed as "Level 1" on the GAAP hierarchy.
1.7. 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 seven members
C. Both the FASB and the GASB can approve pronouncements by a simple majority vote.
D. All of the above - Answer✔D. All of the above
1.8. Which of the following sets GAAP for nonprofit organizations?
A. FAF
B. AICPA
C. GASB
D. FASB - Answer✔D. FASB
The jurisdiction of the FASB extends to both private-sector businesses and non-profit
organizations.
1.9. 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 (Government Accountability Office)
3
, ©FYNDLAY 2025 ALL RIGHTS RESERVED 8:29 AM A+
D. SEC - Answer✔B. AICPA
The AICPA has officially designated the FASB, the GASB, and the FASAB as the authoritative
standard-setting bodies for GAAP in thier respective sectors.
1.10. 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. Ensure the board has considered all relevant facts and points of view
before issuing final guidance
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 points of view prior to
arriving at a conclusion.
1.11. Which of the following is NOT automatically proof that an entity should be classified as a
"state or local government" for purposes of the GAAP hierarchy?
A. The officers of the entity are popularly elected.
B. The entity has the power to enact and enforce a tax levy.
C. The entity has the ability to directly issue federally tax-exempt debt.
D. A government is able to unilaterally dissolve the entity, with the entity's net assets reverting
to the government. - Answer✔C. The entity has the ability to directly issue federally tax-exempt
debt.
The entity has the ability to directly issue federally tax-exempt debt (if this is the only criterion
met, the presumption that an entity is governmental may be rebutted based upon compelling,
relevant evidence).
4
