CPFO: ACCOUNTING & FINANCIAL REPORTING
QUESTIONS | QUIZ SMART | SCORE HIGH |
GUARANTEED ACCURACY!
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
infrastructure of public finance. C. They serve as a public-sector performance
management system. - Answer: B. They provide the informational infrastructure of
public finance.
Who is primarily responsible for accounting? A. The governing body B. The independent
auditor C. Management - Answer: C. Management
Who is primarily responsible for financial reporting? A. The governing body B. The
independent auditor C. Management - Answer: C. Management
Which of the following best describes the relationship between accounting and financial
reporting? A. The two terms are essentially interchangeable. B. The two terms are
complementary but distinct. C. The two terms are unrelated. - Answer: B. The two
terms are complementary but distinct.
What determines the content and format of internal financial reports? A. Generally
accepted accounting principles B. Management's needs and preferences C. Both A and
B - Answer: B. Management's needs and preferences
What typically determines the content and format of general purpose external financial
reports? A. Generally accepted accounting principles B. Management's needs and
preferences C. Both A and B - Answer: A. Generally accepted accounting principles
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Which of the following methods of communication would require that a given item meet
the definition of a financial statement element? A. Display B. Disclosure C. Both A and B
- Answer: A. Display
Which of the following methods of communication focuses on providing an operational,
economic, or historical context? A. Disclosure B. Supporting information C. Both A and
B - Answer: B. Supporting information
Which of the following is an essential characteristic of accounting data? A. Precision B.
Comparability C. Both A and B - Answer: B. Comparability
Who is ultimately responsible for a government's financial reporting? A. The
independent auditor B. Management C. The governing body - Answer: C. The
governing body
The principle that a local government possesses only those powers that are expressly
granted to it by the state, or that are otherwise indispensable to its continued existence
and functioning, is known as: A. Home rule B. Dillon's Rule C. Comity of powers D.
Federalism - Answer: B. Dillon's Rule
There are two basic categories of local government. On that basis, which of the
following does not belong with the others? A. Township B. Utility C. Municipality D.
County - Answer: B. Utility
The key differences between accounting and financial reporting for businesses and
accounting and financial reporting for state and local governments are primarily
attributable to: A. Differences in environment B. Differences in standard-setting C.
Differences in law D. Differences in accounting theory - Answer: A. Differences in
environment
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Which of the following statements is true concerning the relationship between revenues
earned and related costs? A. It is of most interest to a business. B. It is of most interest
to a government. C. It is of equal interest to both. - Answer: A. It is of most interest to a
business.
Which of the following statements is true concerning the relationship between revenue
generation and the provision of goods and services? A. The relationship is more direct
for a business. B. The relationship is more direct for a government. C. The relationship
is essentially the same for both. - Answer: A. The relationship is more direct for a
business.
Which of the following is a tool used by state and local governments to help assess
stewardship and compliance? A. Consolidation B. Aggregation C. Fund accounting D.
Cost accounting - Answer: C. Fund accounting
Which of the following statements is true concerning the presentation of budgetary
comparisons in connection with financial statements? A. It is required for state and local
governments. B. It is required for businesses. C. Both A and B D. Neither A nor B -
Answer: A. It is required for state and local governments.
Which of the following statements is true regarding measurement focus? A. Government
financial statements always use the same measurement focus as private-sector
businesses. B. Government financial statements sometimes use the same
measurement focus as private-sector businesses. C. Government financial statements
never use the same measurement focus as private-sector businesses. - Answer: B.
Government financial statements sometimes use the same measurement focus as
private-sector businesses.
GAAP provides authoritative guidance for which of the following? A. Internal financial
reporting B. Special purpose external financial reporting C. General purpose external
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
, financial reporting D. All of the above - Answer: C. General purpose external financial
reporting
Which of the following is not properly considered to be a primary user of state and local
government financial statements? A. Investors and creditors B. Managers C. Legislative
and oversight bodies D. None of the above - Answer: B. Managers
Which of the following is always issued as part of the GASB's due process? A. Invitation
to comment (ITC) B. Discussion memorandum (DM) C. Preliminary views (PV) D. None
of the above - Answer: D. None of the above
Which of the following has the highest status on the GAAP hierarchy for state and local
governments? A. NCGA statement B. GASB implementation guide C. AICPA statement
of position specific to government and cleared by the GASB D. AICPA issues paper -
Answer: A. NCGA statement
Which of the following would not be covered by either the AICPA Compliance with
Standards Rule, Code section 1.310.001, or Accounting Principles Rule, Code section
1.320.001? A. GASB implementation guide B. GASB statements C. Widely recognized
and prevalent practice D. All of the above are covered by one of those rules - Answer:
C. Widely recognized and prevalent practice
Which of the following is a true statement regarding the application of nonauthoritative
accounting literature: A. If there is no category A or B GAAP applicable to a
government's situation, it should follow guidance applicable to not-for-profit
organizations in similar situations. B. If a government identifies at least 10 other
governments that follow a particular accounting convention, that is sufficient to assume
that the practice is widely recognized and prevalent. C. A government would never
follow the accounting practices found in an accounting journal if there is a
pronouncement of another accounting standards board that provides conflicting
guidance. D. Governments should always assess whether the guidance found in any
4
APPHIA - Crafted with Care and Precision for Academic Excellence.
QUESTIONS | QUIZ SMART | SCORE HIGH |
GUARANTEED ACCURACY!
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
infrastructure of public finance. C. They serve as a public-sector performance
management system. - Answer: B. They provide the informational infrastructure of
public finance.
Who is primarily responsible for accounting? A. The governing body B. The independent
auditor C. Management - Answer: C. Management
Who is primarily responsible for financial reporting? A. The governing body B. The
independent auditor C. Management - Answer: C. Management
Which of the following best describes the relationship between accounting and financial
reporting? A. The two terms are essentially interchangeable. B. The two terms are
complementary but distinct. C. The two terms are unrelated. - Answer: B. The two
terms are complementary but distinct.
What determines the content and format of internal financial reports? A. Generally
accepted accounting principles B. Management's needs and preferences C. Both A and
B - Answer: B. Management's needs and preferences
What typically determines the content and format of general purpose external financial
reports? A. Generally accepted accounting principles B. Management's needs and
preferences C. Both A and B - Answer: A. Generally accepted accounting principles
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Which of the following methods of communication would require that a given item meet
the definition of a financial statement element? A. Display B. Disclosure C. Both A and B
- Answer: A. Display
Which of the following methods of communication focuses on providing an operational,
economic, or historical context? A. Disclosure B. Supporting information C. Both A and
B - Answer: B. Supporting information
Which of the following is an essential characteristic of accounting data? A. Precision B.
Comparability C. Both A and B - Answer: B. Comparability
Who is ultimately responsible for a government's financial reporting? A. The
independent auditor B. Management C. The governing body - Answer: C. The
governing body
The principle that a local government possesses only those powers that are expressly
granted to it by the state, or that are otherwise indispensable to its continued existence
and functioning, is known as: A. Home rule B. Dillon's Rule C. Comity of powers D.
Federalism - Answer: B. Dillon's Rule
There are two basic categories of local government. On that basis, which of the
following does not belong with the others? A. Township B. Utility C. Municipality D.
County - Answer: B. Utility
The key differences between accounting and financial reporting for businesses and
accounting and financial reporting for state and local governments are primarily
attributable to: A. Differences in environment B. Differences in standard-setting C.
Differences in law D. Differences in accounting theory - Answer: A. Differences in
environment
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Which of the following statements is true concerning the relationship between revenues
earned and related costs? A. It is of most interest to a business. B. It is of most interest
to a government. C. It is of equal interest to both. - Answer: A. It is of most interest to a
business.
Which of the following statements is true concerning the relationship between revenue
generation and the provision of goods and services? A. The relationship is more direct
for a business. B. The relationship is more direct for a government. C. The relationship
is essentially the same for both. - Answer: A. The relationship is more direct for a
business.
Which of the following is a tool used by state and local governments to help assess
stewardship and compliance? A. Consolidation B. Aggregation C. Fund accounting D.
Cost accounting - Answer: C. Fund accounting
Which of the following statements is true concerning the presentation of budgetary
comparisons in connection with financial statements? A. It is required for state and local
governments. B. It is required for businesses. C. Both A and B D. Neither A nor B -
Answer: A. It is required for state and local governments.
Which of the following statements is true regarding measurement focus? A. Government
financial statements always use the same measurement focus as private-sector
businesses. B. Government financial statements sometimes use the same
measurement focus as private-sector businesses. C. Government financial statements
never use the same measurement focus as private-sector businesses. - Answer: B.
Government financial statements sometimes use the same measurement focus as
private-sector businesses.
GAAP provides authoritative guidance for which of the following? A. Internal financial
reporting B. Special purpose external financial reporting C. General purpose external
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
, financial reporting D. All of the above - Answer: C. General purpose external financial
reporting
Which of the following is not properly considered to be a primary user of state and local
government financial statements? A. Investors and creditors B. Managers C. Legislative
and oversight bodies D. None of the above - Answer: B. Managers
Which of the following is always issued as part of the GASB's due process? A. Invitation
to comment (ITC) B. Discussion memorandum (DM) C. Preliminary views (PV) D. None
of the above - Answer: D. None of the above
Which of the following has the highest status on the GAAP hierarchy for state and local
governments? A. NCGA statement B. GASB implementation guide C. AICPA statement
of position specific to government and cleared by the GASB D. AICPA issues paper -
Answer: A. NCGA statement
Which of the following would not be covered by either the AICPA Compliance with
Standards Rule, Code section 1.310.001, or Accounting Principles Rule, Code section
1.320.001? A. GASB implementation guide B. GASB statements C. Widely recognized
and prevalent practice D. All of the above are covered by one of those rules - Answer:
C. Widely recognized and prevalent practice
Which of the following is a true statement regarding the application of nonauthoritative
accounting literature: A. If there is no category A or B GAAP applicable to a
government's situation, it should follow guidance applicable to not-for-profit
organizations in similar situations. B. If a government identifies at least 10 other
governments that follow a particular accounting convention, that is sufficient to assume
that the practice is widely recognized and prevalent. C. A government would never
follow the accounting practices found in an accounting journal if there is a
pronouncement of another accounting standards board that provides conflicting
guidance. D. Governments should always assess whether the guidance found in any
4
APPHIA - Crafted with Care and Precision for Academic Excellence.
