CGFM TEST 2 Exam Questions and
Answers Graded A+
Governments exist to provide services - Correct answer-no profit motive, no single
measure of success
Primary funding source = - Correct answer-taxes (involuntary payments, because
there is no ability to match services to those who provide the resource)
Budget process = - Correct answer-primary control device in government
US Constitution provides two levels of government - Correct answer-Federal and
State
State consitituions similar in that each defines the excutive and legislative braches,
establishes political offices, and defines how local governments can be formed.
Government Accountability - Correct answer-based on the belief that the
government has a responsibility to report, the public has a right to know, andthe
ultimate power belongs to the people.
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,1) Legal Accountability - Correct answer-public officials are accountable for the
extablishment of controls to ensure that transations are processed properly
2) Performance Accountability - Correct answer-acting in an efficient, effective, or
economic manner.
3) Fiscal Accountability - Correct answer-raising and allocation of resources to
accomplish objectives
4) Operational Accountability - Correct answer-stewardship of public resources
Which branch is accountable to whom? - Correct answer-Legislative --> to the
public
Executive --> to legislative and public as well as other governments
Interperiod Equity - Correct answer-current generation of citizens should not be
able to shift the burden of paying for current-year services to future taxpayers
balanced budget law = current year services must be financed with current year
revenues (problem is financial data can be manipulated to achieve this). Fed Gov't
not subject to this.
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,Laws prohibiting borrowing - Correct answer-* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - Correct answer-1) Legislators and oversight groups
2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
Need for financial reports - Correct answer-1) primary communication device for
assessing accountability
2) aid in decision making process (economic, social, and political)
* planning and administration
* results of operations
* financial condition of the organization
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, Point in time financial reports - Correct answer-provides current information as of
the date of the reports (e.g. balance sheet)
Period financial reports - Correct answer-reports the activity for an entire fiscal
period (month, year)
General Purpose External Financial Reports (GPEFR)/CAFR - Correct answer-1)
audited financial statements (including notes)
"basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
Special Purpose Financial Reports (may or may not be provided to external users) -
Correct answer-* budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
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Answers Graded A+
Governments exist to provide services - Correct answer-no profit motive, no single
measure of success
Primary funding source = - Correct answer-taxes (involuntary payments, because
there is no ability to match services to those who provide the resource)
Budget process = - Correct answer-primary control device in government
US Constitution provides two levels of government - Correct answer-Federal and
State
State consitituions similar in that each defines the excutive and legislative braches,
establishes political offices, and defines how local governments can be formed.
Government Accountability - Correct answer-based on the belief that the
government has a responsibility to report, the public has a right to know, andthe
ultimate power belongs to the people.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,1) Legal Accountability - Correct answer-public officials are accountable for the
extablishment of controls to ensure that transations are processed properly
2) Performance Accountability - Correct answer-acting in an efficient, effective, or
economic manner.
3) Fiscal Accountability - Correct answer-raising and allocation of resources to
accomplish objectives
4) Operational Accountability - Correct answer-stewardship of public resources
Which branch is accountable to whom? - Correct answer-Legislative --> to the
public
Executive --> to legislative and public as well as other governments
Interperiod Equity - Correct answer-current generation of citizens should not be
able to shift the burden of paying for current-year services to future taxpayers
balanced budget law = current year services must be financed with current year
revenues (problem is financial data can be manipulated to achieve this). Fed Gov't
not subject to this.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,Laws prohibiting borrowing - Correct answer-* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - Correct answer-1) Legislators and oversight groups
2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
Need for financial reports - Correct answer-1) primary communication device for
assessing accountability
2) aid in decision making process (economic, social, and political)
* planning and administration
* results of operations
* financial condition of the organization
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, Point in time financial reports - Correct answer-provides current information as of
the date of the reports (e.g. balance sheet)
Period financial reports - Correct answer-reports the activity for an entire fiscal
period (month, year)
General Purpose External Financial Reports (GPEFR)/CAFR - Correct answer-1)
audited financial statements (including notes)
"basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
Special Purpose Financial Reports (may or may not be provided to external users) -
Correct answer-* budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
