CGFM TEST BANK 2 2026
COMPREHENSIVE QUESTIONS AND
ACCURATE SOLUTIONS VERIFIED
◉ Primary funding source = Answer: taxes (involuntary payments,
because there is no ability to match services to those who provide the
resource)
◉ Budget process = Answer: primary control device in government
◉ US Constitution provides two levels of government 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 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.
◉ 1) Legal Accountability Answer: public officials are accountable for
the extablishment of controls to ensure that transations are processed
properly
,◉ 2) Performance Accountability Answer: acting in an efficient,
effective, or economic manner.
◉ 3) Fiscal Accountability Answer: raising and allocation of resources
to accomplish objectives
◉ 4) Operational Accountability Answer: stewardship of public
resources
◉ Which branch is accountable to whom? Answer: Legislative --> to the
public
Executive --> to legislative and public as well as other governments
◉ Interperiod Equity 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.
◉ Laws prohibiting borrowing Answer: * only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
,◉ Users of financial reports 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 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
◉ Point in time financial reports Answer: provides current information
as of the date of the reports (e.g. balance sheet)
◉ Period financial reports Answer: reports the activity for an entire
fiscal period (month, year)
, ◉ General Purpose External Financial Reports (GPEFR)/CAFR 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) Answer: * budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
◉ Reporting Characteristics Answer: 1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
6) comparability
COMPREHENSIVE QUESTIONS AND
ACCURATE SOLUTIONS VERIFIED
◉ Primary funding source = Answer: taxes (involuntary payments,
because there is no ability to match services to those who provide the
resource)
◉ Budget process = Answer: primary control device in government
◉ US Constitution provides two levels of government 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 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.
◉ 1) Legal Accountability Answer: public officials are accountable for
the extablishment of controls to ensure that transations are processed
properly
,◉ 2) Performance Accountability Answer: acting in an efficient,
effective, or economic manner.
◉ 3) Fiscal Accountability Answer: raising and allocation of resources
to accomplish objectives
◉ 4) Operational Accountability Answer: stewardship of public
resources
◉ Which branch is accountable to whom? Answer: Legislative --> to the
public
Executive --> to legislative and public as well as other governments
◉ Interperiod Equity 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.
◉ Laws prohibiting borrowing Answer: * only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
,◉ Users of financial reports 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 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
◉ Point in time financial reports Answer: provides current information
as of the date of the reports (e.g. balance sheet)
◉ Period financial reports Answer: reports the activity for an entire
fiscal period (month, year)
, ◉ General Purpose External Financial Reports (GPEFR)/CAFR 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) Answer: * budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
◉ Reporting Characteristics Answer: 1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
6) comparability
