CGA Public Sector & Not-for-Profit Accounting 2

Question 1

Under PSAB, tangible capital assets acquired by government entities are:

Accepted Answer

Capitalized and amortized over their useful lives

Answer

PSAB requires governments to capitalize tangible capital assets and amortize them over their estimated useful lives on a systematic and rational basis.

Question 2

Which concept explains why a government's budget document is considered a legally binding authorization for expenditures?

Accepted Answer

Legislative appropriation

Answer

Legislative appropriation is the legal authority granted by the legislature authorizing the government to spend funds up to specified limits for designated purposes.

Question 3

A municipality receives a $2 million provincial grant restricted to road repairs. Under the deferral method, when is this grant recognized as revenue?

Accepted Answer

As the related road repair expenditures are incurred

Answer

Under the deferral method, externally restricted contributions are recognized as revenue in the period the related expenditures are incurred, matching revenue with the funded activity.

Question 4

What is the primary purpose of the Statement of Operations in a public sector entity's financial statements?

Accepted Answer

To report the annual surplus or deficit and cumulative accumulated surplus/deficit

Answer

The Statement of Operations presents revenues and expenses for the period and shows the resulting annual surplus or deficit, as well as the accumulated surplus/deficit position.

Question 5

In public sector accounting, 'net debt' is defined as:

Accepted Answer

Financial liabilities minus financial assets

Answer

Net debt is a key public sector indicator calculated as financial liabilities minus financial assets, measuring the government's future revenues needed to pay existing obligations.

(CGA) Certified General Accountant Practice Test

(CGA) Certified General Accountant Practice Test

CGA Public Sector & Not-for-Profit Accounting 2