CGFM TEST 2 2025 Questions and
Answers
Governments exist to provide services - --Answer --no profit motive, no
single measure of success
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.
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,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
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,* 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)
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, 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
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 4
Answers
Governments exist to provide services - --Answer --no profit motive, no
single measure of success
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.
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
,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
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
,* 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)
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 3
, 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
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 4
