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CGFM Exam 2 Questions with Verified
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I 1.The Defense Logistics Agency holds jet fuel as inventory, which it sells to support flight operations. The table on the left provides beginning/ending fiscal year 2017 inventory levels and purchase information. Assuming the agency uses the FIFO inventory valuation method, what was the cost of goods sold for jet fuel in fiscal year 2017? - ANS-Correct Answer: $133. I 2.In financial reporting, consistency of communication means - ANS-Correct Answer: if accounting principles have changed or if the financial reporting entity has changed, the nature and reason for the change, as well as the effect of the change, should be disclosed. I 3.Budgeting is an element of which policy? - ANS-Correct Answer: fiscal I 4.Another term for the federal government baseline budget is - ANS-Correct Answer: a current level of service budget. I 5.As described by FASAB, the four groups of people to whom the government is accountable and are, therefore, potential users of federal financial statements are - ANS-Correct Answer: citizens, Congress, executives, and program managers. I 6.When establishing an allowance for doubtful accounts, the journal entry required is a debit to - ANS-Correct Answer: Bad Debts Expense and a credit to the Allowance for Doubtful Accounts. I 7.Street resurfacing is a type of which budget element? - ANS-Correct Answer: program I 8.Which of the following is a correct accounting entry when one government agency receives a grant from another government agency? - ANS-Correct Answer: The grantor agency recognizes liability and the recipient agency recognizes non-exchange revenue when the recipient agency meets all eligibility requirements. I 9.Which of the following sources of accounting principles is at the top of the GASB hierarchy? - ANS-Correct Answer: Generally Accepted Accounting Principles I 10.The role of the International Public Sector Accounting Standards Board is to - ANS- Correct Answer: set standards for the general purpose financial statements of international public sector entities.
I 11.A state needs to determine its indirect cost rate for fringe benefits as a function of direct salaries costs of $3 million. Based on the information shown on the left, the indirect cost is - ANS-Correct Answer: 10.8% I 12.Non-exchange revenue includes inflows of resources arising from - ANS-Correct Answer: taxes, fines and penalties from the private sector. I 13.A group of activities within a function are known as - ANS-Correct Answer: a program. I 14.In financing capital projects, special assessments are used to ensure that - ANS- Correct Answer: the individuals benefiting from the project are the ones who pay for it. I 15.The organizations that establish the standards used by their constituents for external reporting purposes include FASB, FASAB, GASB and - ANS-Correct Answer: International Public Sector Accounting Standards Board. I 16.Which of the following terms describes costs an agency incurs on behalf of another agency? - ANS-Correct Answer: inter-entity I 17.State and local governments need cost information to receive reimbursements for allowable costs for federal grants, while federal agencies are required to have cost accounting concepts in the preparation of what type of statements? - ANS-Correct Answer: financial statements I 18.State and local governments use encumbrances as the major budgetary control tool to ensure availability of funds prior to entering agreements, while the federal government instills budgetary control using - ANS-Correct Answer: commitments and obligations. I 19.The equipment department of a municipality rents out equipment to other departments and wants to set a fee that will recover expenses. The department estimates 10,000 rentals per year, with the annual operating costs shown on the left. The department has $5,000 in annual interest payments and $15,000 in annual debt service payments for the loan they took out to purchase the equipment. The annual depreciation on the equipment is $7,500. Based on this information, the user fee should be set at - ANS-Correct Answer: $91.25 per rental. I 20.Apportionments and allotments are used by agencies to ensure - ANS-Correct Answer: that outlays do not exceed appropriations. I 21.Departments and agencies submit their apportionment requests for future expenditures during which budget phase? - ANS-Correct Answer: execution
I 35.Limitations on the amount, purpose or period of availability of budget authority are established by the - ANS-Correct Answer: legislative branch in appropriation acts and legislation. I 36.A continuing resolution is defined as - ANS-Correct Answer: a law allowing federal organizational units to continue operating for a limited period of time, while the budget process continues. I 37.Which type of budgeting links strategic goals with related long-term and annual performance goals, and with the costs of specific activities that contribute to the achievement of those goals? - ANS-Correct Answer: performance budgeting I 38.As a way to improve the effectiveness and efficiency of programs, some states and local governments use what type of budgeting? - ANS-Correct Answer: performance I 39.A claim in the amount of $500,000 has been filed against a state agency for a wrongful termination occurring in the previous fiscal year. The initial hearing is set for January 15th. The attorney general's office has determined the probability of payment is remote. In the state's comprehensive annual financial report due December 31st, the claim should be - ANS-Correct Answer: omitted from the current year CAFR. I 40.General obligation bonds differ from revenue bonds in that general obligation bonds
- ANS-Correct Answer: are backed by the full faith and credit of the government. I 41.Which of the following documents, related to accounting standards, outlines the results of research efforts of staff, defines accounting and reporting issues for a particular project, and solicits opinions from constituents? - ANS-Correct Answer: discussion memorandum I 42.A contingency should be recorded as a liability - ANS-Correct Answer: when an event has occurred, future outflow is probable and the outflow is measurable. I 43.Using Salaries and Fringes as the base, what is the Indirect Rate, based on the information shown on the left? - ANS-Correct Answer: 5% I 44.The accrual basis of accounting measures revenue when - ANS-Correct Answer: it is earned. I 45.Governmental financial reports document all of the following information EXCEPT - ANS-Correct Answer: whether the government is operating efficiently. I 46.A federal agency receives services from another entity that does not bill the agency for those services. However, the cost of those services are material and significant, form an integral part of the agency's output, and can be estimated with reasonable precision. Those costs are called - ANS-Correct Answer: imputed costs and should be included in the agency's financial statements.
I 47.GASB, FASB and FASAB have been designated as standard-setting bodies for accounting and reporting standards by the - ANS-Correct Answer: AICPA. I 48.Federal appropriations provide the legal authority for undertaking programs, allocating resources and - ANS-Correct Answer: expending funds. I 49.A supervisor within a state agency manages a staff of ten individuals, each working on different federal programs. While the department receives an appropriation to pay for program benefits, the department receives no appropriation to pay for salaries. The supervisor's salary should be charged - ANS-Correct Answer: as an indirect cost to all federal programs, based on the cost allocation plan. I 50.Federal agency financial reports allow the reader to assess the - ANS-Correct Answer: financial results of an agency's operations. I 51.An entity operates a program with the costs shown on the left. The total cost allocable to the federal award is - ANS-Correct Answer: $104,500. I 52.In government reporting, how is a Homeless Initiative classified? - ANS-Correct Answer: program I 53.A governmental entity is determining the user fee to be assessed for renting a cabin at a state park. Annual costs associated with operating the campsite are as shown on the left. The campsite has 10 cabins and expects each to be rented for 26 weeks, per year. Based on this information, the weekly user fee needed to break even for the fiscal year is - ANS-Correct Answer: $692.31. I 54.All of the following are general criteria that a cost must meet to be allowable under an intergovernmental cost-reimbursement contract or grant EXCEPT that the cost must be - ANS-Correct Answer: used to meet the matching requirement of another award. I 55.The Digital Accountability and Transparency Act combines which two pieces of financial data to improve open reporting of government financial information? - ANS- Correct Answer: data standards and an on-line data exchange I 56.Which of the following would be affected by both the measurement focus and the basis of accounting? - ANS-Correct Answer: a transaction involving legal and other claims I 57.Governments use cost accounting information to - ANS-Correct Answer: monitor and improve program economy, receive cost reimbursements, establish user fees and identify efficiencies. I 58.Which objective of federal financial reporting is exemplified by the statement that "Federal financial reporting should help the reader determine whether future budgetary
I 69.The county recorder's office sells hunting licenses, which are valid for one season. Licenses have been sold from this office for the past 20 years and have seen relatively stable growth. To forecast sales in the upcoming year, the recorder reviews receipts for the previous three years and adjusts for the increase in the license fee. This method of forecasting revenues is called - ANS-Correct Answer: trend analysis. II 1.A county government operates on a July 2017-June 2018 fiscal year and has budgeted $300 million in property tax revenue for the current fiscal year. As of June 2018, the county had received $283.2 million in property tax revenue. The following month, the county received an additional $7.2 million. In September 2018, the county received an additional $3.7 million. Using the modified accrual approach to accounting, how much property tax revenue should be recognized in fiscal year 2017-18? - ANS- Correct Answer: $290.4 million II 2.At the state and local level, government-wide financial statements - ANS-Correct Answer: include the statement of net assets or position. II 3.A government that records a deferred inflow for revenue not received, within 60 days of the end of the fiscal year, is using - ANS-Correct Answer: the modified accrual basis of accounting. II 4.The GASB standards for determining a reporting entity include consideration of the entity's - ANS-Correct Answer: financial accountability. II 5.The general fund of a city provides a $100,000 annual subsidy to the city-owned golf course. This subsidy is an example of - ANS-Correct Answer: an interfund transfer. II 6.An expenditure-driven, federal, three-year grant has a total award amount of $600,000 and a first-year budget of $200,000. Actual first-year expenditures are $195,000, of which $170,000 has been billed and received prior to the June 30 fiscal year end. The remaining $25,000 will be billed and received in July. What is the total amount of grant revenue that should be recognized for the first fiscal year, ending June 30? - ANS-Correct Answer: $195, II 7.To record infrastructure using the modified approach, upgrading fiber cables of a state's communication network to allow data to flow at higher speeds should be - ANS- Correct Answer: capitalized as an improvement to infrastructure. II 8.The notes to the financial statements are required, if applicable, to include all of the following EXCEPT - ANS-Correct Answer: demographic and economic information. II 9.If a business remits city sales taxes to the state tax agency, which then passes the taxes down to the municipality, a city using the accrual basis of accounting should record this revenue during the period when - ANS-Correct Answer: the business earns the revenue upon which the taxes are incurred.
II 10.A government established an encumbrance for a computer for $3,000 to be paid out of restricted fund balance. The actual cost of the computer ended up being $2,800. Looking at the image on the left, what journal entries should be made at the time of payment? - ANS-Correct Answer: Option 1 II 11.Which type of fund is used to record state employee's voluntary retirement contributions? - ANS-Correct Answer: fiduciary fund II 12.In state and local governments, the MD and A includes - ANS-Correct Answer: an analysis of the significant variances between budgeted and actual amounts. II 13.In contrast to fund-based reporting, government-wide financial statements - ANS- Correct Answer: aggregate financial activity across funds. II 14.All of the following are purposes of the basic financial statements of a city EXCEPT to - ANS-Correct Answer: provide summary information and reports. II 15.All of the following are characteristics of the reporting requirements of fiduciary funds in state and local government financial statements EXCEPT - ANS-Correct Answer: they are reported at the government-wide level. II 16.A pension plan in which plan assets are pooled for investment purposes, but separate accounts are maintained for each individual, is called - ANS-Correct Answer: an agent employer plan. II 17.Which GASB statement established the MD and A as RSI? - ANS-Correct Answer: GASB 34 II 18.According to GASB Statement No. 39, which potential component unit could be reported as a component unit to the primary reporting entity? - ANS-Correct Answer: legally separate, tax-exempt entities II 19.A government purchases vehicles for its fire department at a cost of $350,000. Looking at the image on the left, how would this purchase be recorded on the government-wide statements? - ANS-Correct Answer: Option 4 II 20.In government accounting, capital assets are reported in all of the following EXCEPT - ANS-Correct Answer: governmental funds. II 21.A law was passed and signed by the governor, which required the first $1,000, received from cigarette taxes to be used for a smoking cessation program in the subsequent year. In which category, in the fund balance section of the Governmental Fund Balance Sheet, should this amount be reflected? - ANS-Correct Answer: Committed Fund Balance
II 34.A state issues bonds to be paid equally over 20 years. Payments will begin in the year subsequent to issue. Based on this information, what entry from the image on the left is necessary to record the debt in the governmental fund? - ANS-Correct Answer: Option 1 II 35.Which of the following is commonly included in the notes to the financial statement? - ANS-Correct Answer: Schedule of short-term debt and purpose. II 36.In addition to the Balance Sheet, which of the following financial statements are required for governmental funds? - ANS-Correct Answer: the Statement of Revenues, Expenditures, and Changes in Fund Balance II 37.During the legislative session, appropriations were passed in the amount of $1. billion. It is expected that all appropriations will be spent by the various departments. The revenue estimating committee expects revenues, during the fiscal year, in the amount of $1.7 billion. Based on this information, which of the journal entries in the image on the left should be made to record the budget? - ANS-Correct Answer: Option 3 II 38.The notes to the financial statements can be found in which portion of the CAFR? - ANS-Correct Answer: basic financial statements II 39.A state agency has a special revenue fund to receive court filing fees and support court case management system. The State's fiscal year runs from July 1 to June 30. The image on the left shows the export from the Trial Balance for this fund, as of October 31, 2015.Based on this information the fund balance as of October 31, 2015 is
- ANS-Correct Answer: $890,000. II 40.Under the Federal Credit Reform Act of 1990, the difference between the outstanding principal of direct loans and the present value of estimated net cash inflows is recognized as - ANS-Correct Answer: a subsidy cost allowance on the balance sheet and an expense on the statement of net cost. II 41.A citizen gives money to a city with the stipulation that the principal remain intact, and that the investment earnings be used to provide scholarships for city residents to go to a university of their choice. Based on this information, the money would be accounted for in which of the following funds? - ANS-Correct Answer: private-purpose trust fund II 42.Property tax information for a city, for fiscal year 2018 is shown on the left. Under the modified accrual basis of accounting, what amount of property tax revenue should the city record for 2018? - ANS-Correct Answer: $ 9,500, II 43.Where would a reader of a CAFR find the auditor's report? - ANS-Correct Answer: in the financial section
II 44.Note disclosure for government combinations should include - ANS-Correct Answer: a description of the primary reason for the combination. II 45.A state is preparing the statement of net position and has the following interfund receivables and payables: 1) The Department of Natural Resources receives revenues from camping fees. The funding received has legal restrictions requiring receipts to be used solely for maintaining the parks. At the end of the fiscal year, the Department owed $6,000 from this fund to the state's Utility Fund which provides lighting for all campgrounds. 2) The Department of Human Services owes $10,000 in funds appropriated for general use to the state's employee pension fund. 3) The state's Utility Services Department owes $25,000 to the state's Communication Department, which provides phone and other telecommunication services for all government departments.
- Tax revenues collected for use in the state's operating budget are to be transferred to the debt service fund to be used for principle and interest payments on the state' - ANS- Correct Answer: $16,000. II 46.The GASB requirement that governments describe the extent to which investments are exposed to certain risks, and the policies for mitigating these risks, is designed to help readers assess all of the following EXCEPT the - ANS-Correct Answer: purchasing power of the government. II 47.Using the accrual basis of accounting, sales taxes are recognized by the government as revenue in the period that the - ANS-Correct Answer: sale takes place; the amount is the net of estimated refunds. II 48.Which of the following would be a reason for an item to be included in the reconciliation of fund balances to net position for government activities at the government-wide reporting level? - ANS-Correct Answer: Deferred outflows and inflows of resources in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. II 49.A state purchases a new building during the fiscal year. The purchase was recorded at the fund level. To prepare the government-wide statements, which of the journal entries shown on the left is necessary? - ANS-Correct Answer: Option 2 II 50.A city leases two fire trucks; the lease does not transfer ownership of the trucks to the city at the end of the lease term, and does not include an option to purchase the trucks at a discounted price. The lease term is equal to or greater than 75% of the estimated economic life of the fire trucks. This lease is an example of - ANS-Correct Answer: a capital lease; the capitalization should be performed at the inception of the agreement. II 51.An agency received a grant to establish a substance abuse program. A contract was procured for the first year and an encumbrance was recorded at the time of the procurement. When the first bill is received, which journal entry from the image on the left is used to record the expected payment? - ANS-Correct Answer: Option 1
III 11.What term is used to describe funds that are available until the purpose for which the program was established is completed, or until there are no more recipients? - ANS- Correct Answer: no-year funds III 12.As defined by the Statement of Federal Financial Accounting Concepts 2, to be a reporting entity an organization must meet all of the following criteria EXCEPT - ANS- Correct Answer: likely users of the budgetary accounts could hold the entity accountable for its deployment and use of resources. III 13.Under the Federal Credit Reform Act, the student loan subsidy rate is reassessed annually to reflect - ANS-Correct Answer: interest rate fluctuation and defaults. III 14.One of the duties of the U.S. Department of the Treasury is to - ANS-Correct Answer: serve as the financial manager and fiscal agent of the U.S. government. III 15.Trust funds within the federal government refer to - ANS-Correct Answer: accounts maintained by the federal government for recording dedicated collections and expenditures. III 16.On an annual basis, OMB is to provide information on how the required Government Performance and Results Act Modernization Act's outcome-oriented, crosscutting goals will be achieved. Which of the following federal agency-issued reports will assist in meeting this objective? - ANS-Correct Answer: MD and A and Performance Reports III 17.A formal delegation of authority, by the head of a federal entity to other entity employees, to incur obligations within the specified amount, is called - ANS-Correct Answer: an allotment. III 18.If an entity appears in the federal consolidated financial report in the section entitled "Federal Programs by Agency and Account," under FASAB SSFAC2, it is based on - ANS-Correct Answer: conclusive criteria. III 19.How did agency accounting for loan programs change after the passage of the Federal Credit Reform Act? - ANS-Correct Answer: A subsidy rate must be calculated for loan programs and used by agencies to determine costs for continuing loan programs. III 20.A federal agency's Fund Balance With Treasury is decreased by which of the following events? - ANS-Correct Answer: confirmed disbursements III 21.Approved posting models for federal accounting transactions are published in the U.S. Standard General Ledger by the - ANS-Correct Answer: U.S. Department of the Treasury.
III 22.What does the Fund Balance with Treasury represent at the department level? - ANS-Correct Answer: an intragovernmental asset III 23.What type of funds are revolving funds that conduct business-type operations primarily within and between federal government agencies? - ANS-Correct Answer: intragovernmental funds III 24.To recognize the receipt of an order, the agency should credit - ANS-Correct Answer: delivered orders-unpaid. III 25.The journal entry credit shown on the left would be used to record - ANS-Correct Answer: an amount of money made available to carry out the program operations. III 26.A federal agency issues a purchase order for office equipment. Looking at the image on the left, the corresponding accounting entry would be: - ANS-Correct Answer: Option 1 III 27.In addition to current-year appropriations, which of the following are budgetary resources? - ANS-Correct Answer: recoveries from prior-year obligations, and spending authority from offsetting collections III 28.How does the Statement of Federal Financial Accounting Concepts 2, Entity and Display, address whether an entity should be included in the federal reporting entity? - ANS-Correct Answer: It provides a conclusive criterion automatically requiring the entity be included in the federal reporting entity, and it provides indicative criteria that must be considered in the aggregate. III 29.What service publishes guidance for federal agency financial operations, including the United States Standard General Ledger (USSGL)? - ANS-Correct Answer: Bureau of the Fiscal Service III 30.In which type of fund does a government hold assets as a trustee or agent? - ANS-Correct Answer: fiduciary fund III 31.FASAB recognizes what four categories of users of federal financial information? - ANS-Correct Answer: citizens, Congress, executives and program managers III 32.Which act requires that the U.S. Department of the Treasury produce an annual consolidated financial report for the government as a whole? - ANS-Correct Answer: The Government Management Reform Act III 33.The Balance Sheet contains data from which of the following financial statements?
- ANS-Correct Answer: Statement of Changes in Net Position III 34.What is the main difference between a PAR and an agency financial report, prepared by federal entities? - ANS-Correct Answer: a PAR contains detailed
III 47.What term is used to describe appropriations with a limited amount of time available for obligation? - ANS-Correct Answer: definite III 48.Which of the following would be included as a note disclosure in federal financial statements? - ANS-Correct Answer: a brief description of the reporting entity and the accounting principles used to prepare the financial statements III 49.Basic financial statements for federal government entities are intended to provide - ANS-Correct Answer: an agency's financial position at the end of the reporting period and net cost of operations during the period. III 50.When presenting consolidated financial reports for the entire government, the effects of intragovernmental transactions are - ANS-Correct Answer: eliminated. III 51.The purpose of reporting required supplementary stewardship information in the federal financial reports is to show - ANS-Correct Answer: certain expenses not capitalized on the federal government's balance sheet. III 52.After completion of the U.S. Consolidated Financial Report, a legally-mandated audit of the report is performed by - ANS-Correct Answer: GAO. III 53.The information in the image on the left details an accounting entry. Which of the following events would have triggered this entry? - ANS-Correct Answer: A federal agency with spending authority deposited payment for services provided into an available receipt fund.
