CGFO Accounting and Financial
Reporting Questions WITH 100%
Correct Answers
\.What are the two most important financial documents in both public and private
organizations? - Answer-✔Budget and annual financial report.
\.What is the purpose of the accounting system? - Answer-✔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? - Answer-✔Provide financial information that is:
Understandable, reliable, relevant, comparable, consistent, and timely.
\.What are generally accepted accounting principles (GAAP)? - Answer-✔Standards adopted by
the accounting profession for recording and reporting transactions.
\.What is the role of the Governmental Accounting Standards Board (GASB)? - Answer-✔To
provide standards, interpretations, and technical bulletins for state and local governments.
\.What are some topics of discussion concerning GAAP? - Answer-✔Basis of accounting,
treatment of fixed assets, and long-term debt.
,\.What is one benefit of standardizing the accounting system? - Answer-✔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? - Answer-✔Users can
interpret financial reports more easily.
\.What is the most important benefit of standardizing the accounting system? - Answer-
✔Assuring users that a common set of rules is being applied to reporting financial operations.
\.What is the purpose of the operating budget? - Answer-✔To plan for spending and expected
revenues.
\.What is the purpose of the capital budget? - Answer-✔To plan for spending on long-term
assets.
\.What is the purpose of the accounting system? - Answer-✔To record financial transactions
authorized by the budget.
\.What is the purpose of journals in the accounting system? - Answer-✔To record transactions.
\.What is the purpose of ledgers in the accounting system? - Answer-✔To reconcile the
cumulative financial impact of transactions.
\.What is the role of generally accepted accounting principles (GAAP)? - Answer-✔To guide the
recording, reconciling, and reporting of transactions.
\.What is GAAP? - Answer-✔Generally Accepted Accounting Principles
,\.What are the goals of GAAP? - Answer-✔Accuracy, reliability, and consistency in reporting
\.How do businesses and governments report their results differently? - Answer-✔Businesses
consolidate results, governments report by funds
\.What is a fund in governmental accounting? - Answer-✔A fiscal and accounting entity with a
self-balancing set of accounts
\.How do funds function in governmental accounting? - Answer-✔Like self-contained businesses
with their own accounts and financial reports
\.What is Principle #1 of governmental accounting? - Answer-✔Maintain accounts on a GAAP
basis and comply with finance-related legal requirements
\.What is Principle #2 of governmental accounting? - Answer-✔Funds must be the basis for
maintaining accounting records
\.What is Principle #3 of governmental accounting? - Answer-✔Identify and define the eleven
basic types of funds used in governmental accounting
\.What is Principle #4 of governmental accounting? - Answer-✔Maintain a minimum number of
funds and only those required by law
\.What is Principle #5 of governmental accounting? - Answer-✔Maintain a distinction in
accounting records among capital assets of different funds
\.What is Principle #6 of governmental accounting? - Answer-✔Maintain historical cost of capital
assets and long-term debt in accounting records
, \.What is Principle #7 of governmental accounting? - Answer-✔Record depreciation of capital
assets in accounting records
\.What is Principle #8 of governmental accounting? - Answer-✔Maintain a clear distinction
between long-term liabilities of specific funds and the general government
\.What is Principle #9 of governmental accounting? - Answer-✔Use accrual basis for
government-wide financial statements and modified accrual basis for fund-specific financial
statements
\.What is Principle #10? - Answer-✔Annual budget adoption and comparison with actual results.
\.What is Principle #11? - Answer-✔Recognition and reporting of interfund transfers depending
on reciprocity.
\.What is Principle #12? - Answer-✔Use of common terminology and classification system.
\.What is Principle #13? - Answer-✔Preparation of interim financial reports and CAFR follows
specified format.
\.What is the difference between accounting methods in government and private sector? -
Answer-✔Government uses modified accrual method for certain funds.
\.Why is governmental accounting more complex than private-sector accounting? - Answer-
✔Multiple funds and differential accounting bases.
\.How is a fund defined? - Answer-✔Fiscal entity with self-balancing accounts.
Reporting Questions WITH 100%
Correct Answers
\.What are the two most important financial documents in both public and private
organizations? - Answer-✔Budget and annual financial report.
\.What is the purpose of the accounting system? - Answer-✔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? - Answer-✔Provide financial information that is:
Understandable, reliable, relevant, comparable, consistent, and timely.
\.What are generally accepted accounting principles (GAAP)? - Answer-✔Standards adopted by
the accounting profession for recording and reporting transactions.
\.What is the role of the Governmental Accounting Standards Board (GASB)? - Answer-✔To
provide standards, interpretations, and technical bulletins for state and local governments.
\.What are some topics of discussion concerning GAAP? - Answer-✔Basis of accounting,
treatment of fixed assets, and long-term debt.
,\.What is one benefit of standardizing the accounting system? - Answer-✔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? - Answer-✔Users can
interpret financial reports more easily.
\.What is the most important benefit of standardizing the accounting system? - Answer-
✔Assuring users that a common set of rules is being applied to reporting financial operations.
\.What is the purpose of the operating budget? - Answer-✔To plan for spending and expected
revenues.
\.What is the purpose of the capital budget? - Answer-✔To plan for spending on long-term
assets.
\.What is the purpose of the accounting system? - Answer-✔To record financial transactions
authorized by the budget.
\.What is the purpose of journals in the accounting system? - Answer-✔To record transactions.
\.What is the purpose of ledgers in the accounting system? - Answer-✔To reconcile the
cumulative financial impact of transactions.
\.What is the role of generally accepted accounting principles (GAAP)? - Answer-✔To guide the
recording, reconciling, and reporting of transactions.
\.What is GAAP? - Answer-✔Generally Accepted Accounting Principles
,\.What are the goals of GAAP? - Answer-✔Accuracy, reliability, and consistency in reporting
\.How do businesses and governments report their results differently? - Answer-✔Businesses
consolidate results, governments report by funds
\.What is a fund in governmental accounting? - Answer-✔A fiscal and accounting entity with a
self-balancing set of accounts
\.How do funds function in governmental accounting? - Answer-✔Like self-contained businesses
with their own accounts and financial reports
\.What is Principle #1 of governmental accounting? - Answer-✔Maintain accounts on a GAAP
basis and comply with finance-related legal requirements
\.What is Principle #2 of governmental accounting? - Answer-✔Funds must be the basis for
maintaining accounting records
\.What is Principle #3 of governmental accounting? - Answer-✔Identify and define the eleven
basic types of funds used in governmental accounting
\.What is Principle #4 of governmental accounting? - Answer-✔Maintain a minimum number of
funds and only those required by law
\.What is Principle #5 of governmental accounting? - Answer-✔Maintain a distinction in
accounting records among capital assets of different funds
\.What is Principle #6 of governmental accounting? - Answer-✔Maintain historical cost of capital
assets and long-term debt in accounting records
, \.What is Principle #7 of governmental accounting? - Answer-✔Record depreciation of capital
assets in accounting records
\.What is Principle #8 of governmental accounting? - Answer-✔Maintain a clear distinction
between long-term liabilities of specific funds and the general government
\.What is Principle #9 of governmental accounting? - Answer-✔Use accrual basis for
government-wide financial statements and modified accrual basis for fund-specific financial
statements
\.What is Principle #10? - Answer-✔Annual budget adoption and comparison with actual results.
\.What is Principle #11? - Answer-✔Recognition and reporting of interfund transfers depending
on reciprocity.
\.What is Principle #12? - Answer-✔Use of common terminology and classification system.
\.What is Principle #13? - Answer-✔Preparation of interim financial reports and CAFR follows
specified format.
\.What is the difference between accounting methods in government and private sector? -
Answer-✔Government uses modified accrual method for certain funds.
\.Why is governmental accounting more complex than private-sector accounting? - Answer-
✔Multiple funds and differential accounting bases.
\.How is a fund defined? - Answer-✔Fiscal entity with self-balancing accounts.
