CGFM TEST 2 UPDATED Exam Questions
and CORRECT Answers
General Purpose Financial Reporting - CORRECT ANSWER - Assists users in assessing
accountability and in making economic, social and political decisions
Interperiod Equity - CORRECT ANSWER - A term coined by the GASB indicating the
extent to which current-period revenues are adequate to pay for current-period services.
Accural Basis Accounting - CORRECT ANSWER - reporting income when it is earned and
expenses when they are incurred
Modified Accural Basis - CORRECT ANSWER -
Primary users of Financial Reports - CORRECT ANSWER - public, legislative bodies,
grantor agencies, the media, investors and creditors, and internal financial managers .
Governmental Accounting Standards Board (GASB) - CORRECT ANSWER - Established by
the Financial Accounting Foundation to develop guidelines for financial accounting and
reporting by state and local governmental units.
Federal Accounting Standards Advisory Board (FASAB) - CORRECT ANSWER - is the
standard setting body for federal agencies and the federal government
Due Process Procedures - CORRECT ANSWER -
Types of Reports Produced By Governments - CORRECT ANSWER -
user fees - CORRECT ANSWER - Charges levied by governments in exchange for services.
,fringe benefits - CORRECT ANSWER - Any financial extras beyond the regular pay check,
such as health insurance, life insurance, paid vacation and/or retirement
Budget Process - CORRECT ANSWER - the method by which government allocate scarce
resources and set forth policy objectives
line item budget - CORRECT ANSWER - it set froths the specific character or object class of
spending
baseline budget - CORRECT ANSWER - project the amount needed in the future to maintain
the same level of services, taking into account changes in inflation rates and demographics
Program Budget - CORRECT ANSWER - focus on specific functions or services
Zero Budget - CORRECT ANSWER - Setting budgets to zero each year and starting over
justifying each new budget
Performance budget - CORRECT ANSWER - uses performance measures as the means to
determine the level of funding
capital budget - CORRECT ANSWER - budget for major capital, or investment, expenditures
Expenditure - CORRECT ANSWER -
encumbrance - CORRECT ANSWER - state version of obligation
Phases of the Budget Process - CORRECT ANSWER - preparation, legislative, execution
operating budget - CORRECT ANSWER - budget for day-to-day expenses
, Debt Service - CORRECT ANSWER - money spent by the state to pay off debt; includes
interest and principal payments
discretionary spending - CORRECT ANSWER - Federal spending on programs that are
controlled through the regular budget process
General Purpose Financial Reports - CORRECT ANSWER - Provide information on the
financial position and operating results of a government entity to users
Economic Resources - CORRECT ANSWER -
Current financial resources - CORRECT ANSWER - In government accounting, the cash or
other assets that will be converted into cash soon enough thereafter to satisfy the obligations of
the current period.
Under Economic Resources what statements does capital and long term debt transaction affect -
CORRECT ANSWER - Financial Position Statement
Under current financial resources what statements does capital and long term debt transaction
affect - CORRECT ANSWER - Operating Statement
Cash Basis Accounting - CORRECT ANSWER - records revenues when cash is received and
expenses when cash is paid
Name the three Basis of Accounting Gov reports use - CORRECT ANSWER - Cash, Accrual
and Modified Accrual
Fund Accounting - CORRECT ANSWER - An accounting system in which an entity's
resources are divided among two or more accounting entities known as funds.
and CORRECT Answers
General Purpose Financial Reporting - CORRECT ANSWER - Assists users in assessing
accountability and in making economic, social and political decisions
Interperiod Equity - CORRECT ANSWER - A term coined by the GASB indicating the
extent to which current-period revenues are adequate to pay for current-period services.
Accural Basis Accounting - CORRECT ANSWER - reporting income when it is earned and
expenses when they are incurred
Modified Accural Basis - CORRECT ANSWER -
Primary users of Financial Reports - CORRECT ANSWER - public, legislative bodies,
grantor agencies, the media, investors and creditors, and internal financial managers .
Governmental Accounting Standards Board (GASB) - CORRECT ANSWER - Established by
the Financial Accounting Foundation to develop guidelines for financial accounting and
reporting by state and local governmental units.
Federal Accounting Standards Advisory Board (FASAB) - CORRECT ANSWER - is the
standard setting body for federal agencies and the federal government
Due Process Procedures - CORRECT ANSWER -
Types of Reports Produced By Governments - CORRECT ANSWER -
user fees - CORRECT ANSWER - Charges levied by governments in exchange for services.
,fringe benefits - CORRECT ANSWER - Any financial extras beyond the regular pay check,
such as health insurance, life insurance, paid vacation and/or retirement
Budget Process - CORRECT ANSWER - the method by which government allocate scarce
resources and set forth policy objectives
line item budget - CORRECT ANSWER - it set froths the specific character or object class of
spending
baseline budget - CORRECT ANSWER - project the amount needed in the future to maintain
the same level of services, taking into account changes in inflation rates and demographics
Program Budget - CORRECT ANSWER - focus on specific functions or services
Zero Budget - CORRECT ANSWER - Setting budgets to zero each year and starting over
justifying each new budget
Performance budget - CORRECT ANSWER - uses performance measures as the means to
determine the level of funding
capital budget - CORRECT ANSWER - budget for major capital, or investment, expenditures
Expenditure - CORRECT ANSWER -
encumbrance - CORRECT ANSWER - state version of obligation
Phases of the Budget Process - CORRECT ANSWER - preparation, legislative, execution
operating budget - CORRECT ANSWER - budget for day-to-day expenses
, Debt Service - CORRECT ANSWER - money spent by the state to pay off debt; includes
interest and principal payments
discretionary spending - CORRECT ANSWER - Federal spending on programs that are
controlled through the regular budget process
General Purpose Financial Reports - CORRECT ANSWER - Provide information on the
financial position and operating results of a government entity to users
Economic Resources - CORRECT ANSWER -
Current financial resources - CORRECT ANSWER - In government accounting, the cash or
other assets that will be converted into cash soon enough thereafter to satisfy the obligations of
the current period.
Under Economic Resources what statements does capital and long term debt transaction affect -
CORRECT ANSWER - Financial Position Statement
Under current financial resources what statements does capital and long term debt transaction
affect - CORRECT ANSWER - Operating Statement
Cash Basis Accounting - CORRECT ANSWER - records revenues when cash is received and
expenses when cash is paid
Name the three Basis of Accounting Gov reports use - CORRECT ANSWER - Cash, Accrual
and Modified Accrual
Fund Accounting - CORRECT ANSWER - An accounting system in which an entity's
resources are divided among two or more accounting entities known as funds.
