CGFM TEST 2 Questions with Complete Solutions (Latest 2025) Governments exist to provide services - Correct Answers ✅no profit motive, no single measure of success Primary funding source = - Correct Answers ✅taxes (involuntary payments, because there is no ability to match services to those who provide the resource) Budget process = - Correct Answers ✅primary control device in government US Constitution provides two levels of government - Correct Answers ✅Federal and State State consitituions similar in that each defines the excutive and legislative braches, establishes political offices, and defines how local governments can be formed.Government Accountability - Correct Answers ✅based on the belief that the government has a responsibility to report, the public has a right to know, andthe ultimate power belongs to the people.1) Legal Accountability - Correct Answers ✅public officials are accountable for the extablishment of controls to ensure that transations are processed properly 1 / 4
CGFM TEST 2 Questions with Complete Solutions (Latest 2025) 2) Performance Accountability - Correct Answers ✅acting in an efficient, effective, or economic manner.3) Fiscal Accountability - Correct Answers ✅raising and allocation of resources to accomplish objectives 4) Operational Accountability - Correct Answers ✅stewardship of public resources Which branch is accountable to whom? - Correct Answers ✅Legislative --> to the public Executive --> to legislative and public as well as other governments Interperiod Equity - Correct Answers ✅current generation of citizens should not be able to shift the burden of paying for current-year services to future taxpayers balanced budget law = current year services must be financed with current year revenues (problem is financial data can be manipulated to achieve this). Fed Gov't not subject to this.Laws prohibiting borrowing - Correct Answers ✅* only to meet cash flow needs 2 / 4
CGFM TEST 2 Questions with Complete Solutions (Latest 2025)
- not for operating purposes
- should match the useful life of capital assets
- planning and administration
- results of operations
- financial condition of the organization
Users of financial reports - Correct Answers ✅1) Legislators and oversight groups 2) Citizens and taxpayers 3) Investors and Creditors 4) Media 5) Financial and Program managers 6) Employees and employee organizations Need for financial reports - Correct Answers ✅1) primary communication device for assessing accountability 2) aid in decision making process (economic, social, and political)
Point in time financial reports - Correct Answers ✅provides current information as of the date of the reports (e.g. balance sheet) 3 / 4
CGFM TEST 2 Questions with Complete Solutions (Latest 2025) Period financial reports - Correct Answers ✅reports the activity for an entire fiscal period (month, year) General Purpose External Financial Reports (GPEFR)/CAFR - Correct Answers ✅1) audited financial statements (including notes) "basic financial statements" - state/local "principal financial statements" - federal 2) required supplementary information 3) other accompanying information (voluntary) Special Purpose Financial Reports (may or may not be provided to external users) - Correct Answers ✅* budget comparison reports
- cash position reports
- offering statements (when issuing debt)
- popular reports
- service efforts and accomplishments
- economy and efficiency
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*grantor reports
Reporting Characteristics - Correct Answers ✅1) understandability 2) reliability - info is verfiable and free from bias