CGFM Test 2: 2025 Questions and
Answers
General Purpose Financial Reporting - ANSWER-Assists users in assessing
accountability and in making economic, social and political decisions
Interperiod Equity - 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 - ANSWER-reporting income when it is earned and
expenses when they are incurred
Modified Accural Basis - ANSWER-
Primary users of Financial Reports - ANSWER-public, legislative bodies, grantor
agencies, the media, investors and creditors, and internal financial managers .
Governmental Accounting Standards Board (GASB) - 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) - ANSWER-is the
standard setting body for federal agencies and the federal government
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
,Due Process Procedures - ANSWER-
Types of Reports Produced By Governments - ANSWER-
user fees - ANSWER-Charges levied by governments in exchange for services.
fringe benefits - ANSWER-Any financial extras beyond the regular pay check, such
as health insurance, life insurance, paid vacation and/or retirement
Budget Process - ANSWER-the method by which government allocate scarce
resources and set forth policy objectives
line item budget - ANSWER-it set froths the specific character or object class of
spending
baseline budget - 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 - ANSWER-focus on specific functions or services
Zero Budget - ANSWER-Setting budgets to zero each year and starting over
justifying each new budget
Performance budget - ANSWER-uses performance measures as the means to
determine the level of funding
capital budget - ANSWER-budget for major capital, or investment, expenditures
Expenditure - ANSWER-
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
, encumbrance - ANSWER-state version of obligation
Phases of the Budget Process - ANSWER-preparation, legislative, execution
operating budget - ANSWER-budget for day-to-day expenses
Debt Service - ANSWER-money spent by the state to pay off debt; includes
interest and principal payments
discretionary spending - ANSWER-Federal spending on programs that are
controlled through the regular budget process
General Purpose Financial Reports - ANSWER-Provide information on the
financial position and operating results of a government entity to users
Economic Resources - ANSWER-
Current financial resources - 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 - ANSWER-Financial Position Statement
Under current financial resources what statements does capital and long term debt
transaction affect - ANSWER-Operating Statement
Cash Basis Accounting - ANSWER-records revenues when cash is received and
expenses when cash is paid
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 3
Answers
General Purpose Financial Reporting - ANSWER-Assists users in assessing
accountability and in making economic, social and political decisions
Interperiod Equity - 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 - ANSWER-reporting income when it is earned and
expenses when they are incurred
Modified Accural Basis - ANSWER-
Primary users of Financial Reports - ANSWER-public, legislative bodies, grantor
agencies, the media, investors and creditors, and internal financial managers .
Governmental Accounting Standards Board (GASB) - 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) - ANSWER-is the
standard setting body for federal agencies and the federal government
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
,Due Process Procedures - ANSWER-
Types of Reports Produced By Governments - ANSWER-
user fees - ANSWER-Charges levied by governments in exchange for services.
fringe benefits - ANSWER-Any financial extras beyond the regular pay check, such
as health insurance, life insurance, paid vacation and/or retirement
Budget Process - ANSWER-the method by which government allocate scarce
resources and set forth policy objectives
line item budget - ANSWER-it set froths the specific character or object class of
spending
baseline budget - 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 - ANSWER-focus on specific functions or services
Zero Budget - ANSWER-Setting budgets to zero each year and starting over
justifying each new budget
Performance budget - ANSWER-uses performance measures as the means to
determine the level of funding
capital budget - ANSWER-budget for major capital, or investment, expenditures
Expenditure - ANSWER-
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
, encumbrance - ANSWER-state version of obligation
Phases of the Budget Process - ANSWER-preparation, legislative, execution
operating budget - ANSWER-budget for day-to-day expenses
Debt Service - ANSWER-money spent by the state to pay off debt; includes
interest and principal payments
discretionary spending - ANSWER-Federal spending on programs that are
controlled through the regular budget process
General Purpose Financial Reports - ANSWER-Provide information on the
financial position and operating results of a government entity to users
Economic Resources - ANSWER-
Current financial resources - 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 - ANSWER-Financial Position Statement
Under current financial resources what statements does capital and long term debt
transaction affect - ANSWER-Operating Statement
Cash Basis Accounting - ANSWER-records revenues when cash is received and
expenses when cash is paid
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 3
