Page |1
Exam 2 CGFM Questions and Correct
Answers/ Latest Update / Already Graded
What is the difference in budgets between Government and the
private sector?
Ans: Its the primary control device in governement
(accountability) but in the private sector its a guide to
operations
Is every State constitution the same? Why?
Ans: No, but common requirements are: executive branch
functions, legislative branch, and how local govt are formed
What is the cornerstone of financial reporting?
Ans: accountability
What are four types of accountability?
Ans: legal accountability - need to comply with
rules/regulations
performance accountability - gov't acts in an efficient and
effective manner
Fiscal accountability - raising of resources and the allocation of
those resources to accomplish objectives
All rights reserved © 2025/ 2026 |
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operational accountability - stewardship of public resources
What is interperiod or intergenerational equity?
Ans: paying current-years services to future-year taxpayers
What is one way the federal gov't tries to balance a budget?
Ans: debt ceiling (public debt that can be outstanding)
What are the common users of governmental financial reports?
Ans: legislators, other oversight org's, citizens, investors,
creditors, media, financial mangers and program managers
What is an example of intergovernmental revenues?
Ans: grants
What are the two types of government financial reports?
Ans: point-in-time (aka stock reports) - current info as of the
date of the report (example: balance sheet)
period report (aka flow reports) - covers the entire fiscal year
All rights reserved © 2025/ 2026 |
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What do the general purpose external financial reports (GPEFR) consist
of?
Ans: audited financial statements, notes, required
supplemental info. Other accompanying info isn't required but
can be included
What is an example of "other financial reports?"
Ans: budget, budget comparison reports, reports that disclose
condition of operations (report on cash, a/r O/s, revenues
generated), offering reports, project reports, and popular
reports
All aka "special purpose financial reports"
What are the characteristics of all reports?
Ans: Understandability - explanations and interpretations to
help users understand
Reliability - verifiable, free from bias
Relevance - s/b capable of making a difference
Timeliness - reported on a time frame
Consistency - principles are used in current and future reports
Comparability - like entities should report same info the same
way
All rights reserved © 2025/ 2026 |
, Page |4
Describe the steps it took to get to the reporting standards today.
Ans: 1929 stock market crash due to companies inducing public
on their "profitability."
1934 SEC was established to regulate securities. SEC granted
authority to FASB for standards. But no standards for local &
state govt's
1934-1941 municipal finance officers association advocated
reporting principles
1968 GAAFR issued ("blue book")
1970 fiscal crises in NY and Cleveland
1974 AICPA issued audit guide
1984 GASB was created but no requirement for state/local gov't
although they adopted it; however, nothing for federal
1990 MOU established FASAB
What are the standard setting organizations?
Ans: GASB - set and improve standards of state and local gov't
FASAB - improving federal financial reporting
FASB - set and improve financial acct & reporting standards in
the private sector
What are common objectives with the GASB and FASAB boards?
All rights reserved © 2025/ 2026 |
Exam 2 CGFM Questions and Correct
Answers/ Latest Update / Already Graded
What is the difference in budgets between Government and the
private sector?
Ans: Its the primary control device in governement
(accountability) but in the private sector its a guide to
operations
Is every State constitution the same? Why?
Ans: No, but common requirements are: executive branch
functions, legislative branch, and how local govt are formed
What is the cornerstone of financial reporting?
Ans: accountability
What are four types of accountability?
Ans: legal accountability - need to comply with
rules/regulations
performance accountability - gov't acts in an efficient and
effective manner
Fiscal accountability - raising of resources and the allocation of
those resources to accomplish objectives
All rights reserved © 2025/ 2026 |
, Page |2
operational accountability - stewardship of public resources
What is interperiod or intergenerational equity?
Ans: paying current-years services to future-year taxpayers
What is one way the federal gov't tries to balance a budget?
Ans: debt ceiling (public debt that can be outstanding)
What are the common users of governmental financial reports?
Ans: legislators, other oversight org's, citizens, investors,
creditors, media, financial mangers and program managers
What is an example of intergovernmental revenues?
Ans: grants
What are the two types of government financial reports?
Ans: point-in-time (aka stock reports) - current info as of the
date of the report (example: balance sheet)
period report (aka flow reports) - covers the entire fiscal year
All rights reserved © 2025/ 2026 |
, Page |3
What do the general purpose external financial reports (GPEFR) consist
of?
Ans: audited financial statements, notes, required
supplemental info. Other accompanying info isn't required but
can be included
What is an example of "other financial reports?"
Ans: budget, budget comparison reports, reports that disclose
condition of operations (report on cash, a/r O/s, revenues
generated), offering reports, project reports, and popular
reports
All aka "special purpose financial reports"
What are the characteristics of all reports?
Ans: Understandability - explanations and interpretations to
help users understand
Reliability - verifiable, free from bias
Relevance - s/b capable of making a difference
Timeliness - reported on a time frame
Consistency - principles are used in current and future reports
Comparability - like entities should report same info the same
way
All rights reserved © 2025/ 2026 |
, Page |4
Describe the steps it took to get to the reporting standards today.
Ans: 1929 stock market crash due to companies inducing public
on their "profitability."
1934 SEC was established to regulate securities. SEC granted
authority to FASB for standards. But no standards for local &
state govt's
1934-1941 municipal finance officers association advocated
reporting principles
1968 GAAFR issued ("blue book")
1970 fiscal crises in NY and Cleveland
1974 AICPA issued audit guide
1984 GASB was created but no requirement for state/local gov't
although they adopted it; however, nothing for federal
1990 MOU established FASAB
What are the standard setting organizations?
Ans: GASB - set and improve standards of state and local gov't
FASAB - improving federal financial reporting
FASB - set and improve financial acct & reporting standards in
the private sector
What are common objectives with the GASB and FASAB boards?
All rights reserved © 2025/ 2026 |
