CGFM CGFM 3 — Questions and Answers
Question 1: Which GASB statement established the requirements for government-wide financial statements?
- GASB Statement No. 27
- GASB Statement No. 34 (Correct answer)
- GASB Statement No. 45
- GASB Statement No. 54
Correct answer: GASB Statement No. 34
GASB Statement No. 34 fundamentally changed governmental financial reporting by requiring government-wide statements alongside fund statements.
Question 2: Under federal appropriations law, the 'bona fide needs rule' states that:
- Appropriations must be spent before the fiscal year ends
- Funds may only be obligated for needs arising during the period of availability (Correct answer)
- All obligations must receive GAO pre-approval
- Agencies must request the minimum amount needed
Correct answer: Funds may only be obligated for needs arising during the period of availability
The bona fide needs rule requires that appropriations only be obligated for genuine needs that exist during the appropriation's period of availability.
Question 3: When a government issues general obligation bonds, the debt is secured by:
- Specific user fees from a designated service
- The full faith and credit and taxing power of the government (Correct answer)
- Revenue from a particular project
- Federal grant reimbursements
Correct answer: The full faith and credit and taxing power of the government
General obligation bonds are backed by the issuing government's full faith and credit, including its unlimited taxing authority.
Question 4: A performance measure that tracks the number of pothole repairs completed per crew per day is an example of a:
- Outcome measure
- Input measure
- Efficiency measure (Correct answer)
- Demand measure
Correct answer: Efficiency measure
Efficiency measures assess the ratio of outputs produced per unit of input, such as work completed per crew per day.
Question 5: Under GAAP for state and local governments, which basis of accounting is used for governmental funds?
- Full accrual basis
- Cash basis
- Modified accrual basis (Correct answer)
- Tax basis
Correct answer: Modified accrual basis
Governmental funds use the modified accrual basis, recognizing revenues when measurable and available, and expenditures when the liability is incurred.
Question 6: The Government Accountability Office (GAO) reports directly to:
- The President of the United States
- The Office of Management and Budget
- Congress (Correct answer)
- The Department of the Treasury
Correct answer: Congress
The GAO is an independent, nonpartisan agency that works for Congress, supporting legislative oversight of the executive branch.
Question 7: An agency that spends more than its appropriation has most likely violated which law?
- Chief Financial Officers Act
- Antideficiency Act (Correct answer)
- Impoundment Control Act
- Prompt Payment Act
Correct answer: Antideficiency Act
The Antideficiency Act prohibits federal agencies from obligating or expending funds in excess of the amount appropriated by Congress.
CGFM CGFM 3
Which GASB statement established the requirements for government-wide financial statements?