Round 2 Combo with CPFO Exam -
Governmental Accounting, Auditing, and
Financial Reporting UPDATED ACTUAL
Exam Questions and CORRECT Answers
Which of the following automatically would qualify as a program revenue?
A. Revenue from expenditure driven grants
B. Revenue from shard revenues
C. Revenue from entitlements
D. All of the above
E. None of the above - CORRECT ANSWER - A. Revenue from expenditure driven grants
Grants and contributions must be program specific to qualify as program revenue. That is, they
must be restricted to use for a specific function or program. Expenditure-driven grants
automatically meet this test.
Which of the following best describes the role that accounting, financial reporting, and the
financial statement audit play for state and local governments?
A. They comprise a comprehensive framework of internal control.
B. They provide the informational infastructure of public finance
C The serve as a public sector performance management system. - CORRECT ANSWER -
B. They provide the informational infastructure of public finance.- Reliable information is
needed to make informed decisions, and the financial statement audit together provide that
information. Thus, accounting, financial reporting and the financial statement audit serve as the
informational infastructure of public finance.
True or False. A description of the scope of the government-wide financial statements is always
required. - CORRECT ANSWER - False. A description of the scope of the government-
wide financial statements is only necessary if a government has either fiduciary funds or
fiduciary-type component units (to explain that they are not included)
, True or False. Cash flows must always be reported gross rather than net. - CORRECT
ANSWER - False. Cash flows normally should be reported gross rather than net. However,
net reporting is expressly permitted for 1) investment that are not classified as cash equivalents,
2) loans receivable and 3) debt, provided those items meet certain criteria.
True or False. A disclosure regarding the allocation of indirect expense is required only if a
separate column is used to allocate indirect expense amoung functions or programs. - CORRECT
ANSWER - False. When governments charge their various departments for centralized
services they often build in a compnent designed to recover administrative costs (indirect
expense). If so, they are not required to remove that mount in the process of consolidation;
however, the SSAP would need to mention that fact.
What is the preferred format for the proprietary fund statement of net position?
A. Net position format
B. Balance sheet format
C. Neither A nor B - CORRECT ANSWER - C. Neither A nor B. While authoritative
standards express a preference for the net position format for the gov-wide statement of net
position, they express no such preference in regard to the format of the proprietary fund
statement of net position.
Which of the following fund types does not appear in the statement of fiduciary net position?
A. Pension (and other employee benefits) trust funds
B. Invstment trust funds
C. Private purpose trust funds
D. Agency funds
E. None of the above - CORRECT ANSWER - E. None of the above. All fidcuciary funds
can report assets and liabilities; therefore, all fiduciary funds potentially are included in the
statement of fiduciary net position.
Which of the following, if present, will always appear on a statement of resource flows,
regardless of measurement focus?
A. Capital outlay
B. Debt service principal payments
Governmental Accounting, Auditing, and
Financial Reporting UPDATED ACTUAL
Exam Questions and CORRECT Answers
Which of the following automatically would qualify as a program revenue?
A. Revenue from expenditure driven grants
B. Revenue from shard revenues
C. Revenue from entitlements
D. All of the above
E. None of the above - CORRECT ANSWER - A. Revenue from expenditure driven grants
Grants and contributions must be program specific to qualify as program revenue. That is, they
must be restricted to use for a specific function or program. Expenditure-driven grants
automatically meet this test.
Which of the following best describes the role that accounting, financial reporting, and the
financial statement audit play for state and local governments?
A. They comprise a comprehensive framework of internal control.
B. They provide the informational infastructure of public finance
C The serve as a public sector performance management system. - CORRECT ANSWER -
B. They provide the informational infastructure of public finance.- Reliable information is
needed to make informed decisions, and the financial statement audit together provide that
information. Thus, accounting, financial reporting and the financial statement audit serve as the
informational infastructure of public finance.
True or False. A description of the scope of the government-wide financial statements is always
required. - CORRECT ANSWER - False. A description of the scope of the government-
wide financial statements is only necessary if a government has either fiduciary funds or
fiduciary-type component units (to explain that they are not included)
, True or False. Cash flows must always be reported gross rather than net. - CORRECT
ANSWER - False. Cash flows normally should be reported gross rather than net. However,
net reporting is expressly permitted for 1) investment that are not classified as cash equivalents,
2) loans receivable and 3) debt, provided those items meet certain criteria.
True or False. A disclosure regarding the allocation of indirect expense is required only if a
separate column is used to allocate indirect expense amoung functions or programs. - CORRECT
ANSWER - False. When governments charge their various departments for centralized
services they often build in a compnent designed to recover administrative costs (indirect
expense). If so, they are not required to remove that mount in the process of consolidation;
however, the SSAP would need to mention that fact.
What is the preferred format for the proprietary fund statement of net position?
A. Net position format
B. Balance sheet format
C. Neither A nor B - CORRECT ANSWER - C. Neither A nor B. While authoritative
standards express a preference for the net position format for the gov-wide statement of net
position, they express no such preference in regard to the format of the proprietary fund
statement of net position.
Which of the following fund types does not appear in the statement of fiduciary net position?
A. Pension (and other employee benefits) trust funds
B. Invstment trust funds
C. Private purpose trust funds
D. Agency funds
E. None of the above - CORRECT ANSWER - E. None of the above. All fidcuciary funds
can report assets and liabilities; therefore, all fiduciary funds potentially are included in the
statement of fiduciary net position.
Which of the following, if present, will always appear on a statement of resource flows,
regardless of measurement focus?
A. Capital outlay
B. Debt service principal payments
