CGFM Study Guide: Governmental, Proprietary,
and Fiduciary Fund Accounting & Reporting
1. Which GASB Codification section establishes the foundational accounting and reporting
standards for state and local funds?
A) Section 1200
B) Section 1300
C) Section 1400
D) Section 1500
Answer: B
The GASB Codification Section 1300 provides the foundation for accounting and financial
reporting standards for state and local governmental funds. It guides the measurement focus,
basis of accounting, and reporting requirements.
2. Funds that are fiscal and accounting entities segregated for specific activities are called:
A) Accounts
B) Reserves
C) Fund
D) Trusts
Answer: C
Funds are separate fiscal and accounting entities established to track financial resources and
expenditures for specific purposes. They allow governments to ensure accountability and proper
resource management.
3. What are the three major categories of funds used by state and local governments?
A) Governmental, Proprietary, Fiduciary
B) General, Special, Permanent
C) Capital, Debt, Investment
D) Revenue, Expense, Trust
Answer: A
State and local governments classify their funds into governmental, proprietary, and fiduciary
categories to distinguish purposes and accounting requirements. Each category has its own
measurement focus and basis of accounting.
4. Governmental funds are traditionally used to account for:
A) Proprietary business activities
B) General services provided to the public
C) Private-purpose trusts
D) Investment pools
Answer: B
,Governmental funds account for services like public safety, health, transportation, social
services, and recreation. They focus on providing public services rather than generating profit.
5. What is the measurement focus and basis of accounting for governmental funds?
A) Economic resources, accrual basis
B) Current financial resources, modified accrual basis
C) Cash resources, cash basis
D) Fund equity, direct basis
Answer: B
Governmental funds use the current financial resources measurement focus and the modified
accrual basis of accounting. Expendable assets pay current liabilities, and fund balance
represents the difference.
6. Which of the following are types of governmental funds?
A) Enterprise, Internal Service
B) Pension, Agency, Investment Trust
C) General, Special Revenue, Capital Projects, Debt Service, Permanent
D) Restricted, Committed, Assigned, Unassigned
Answer: C
Governmental funds include the General Fund, Special Revenue Funds, Capital Projects Funds,
Debt Service Funds, and Permanent Funds. Each fund serves a specific purpose and adheres to
GASB standards.
7. The General Fund is primarily used to:
A) Account for debt payments
B) Account for restricted resources
C) Account for all financial resources not required to be in another fund
D) Account for user fees
Answer: C
The General Fund accounts for all financial resources not restricted to other funds. It is
considered the most important fund and typically holds most administrative services.
8. Common revenue sources for the General Fund include:
A) Sales taxes, property taxes, income taxes, permits, licenses, grants
B) User fees, enterprise charges
C) Pension contributions
D) Investment in trust funds
Answer: A
General Fund revenues come from property, sales, and income taxes, fees and permits,
intergovernmental grants, and fines or investment earnings. These resources fund public services.
9. Special Revenue Funds are used to:
A) Account for general administrative services
B) Report proceeds of major capital projects
C) Account for restricted or committed revenues for specific purposes
D) Record fiduciary assets
, Answer: C
Special Revenue Funds account for financial resources that are legally restricted or committed
for specific activities, except for major capital projects.
10. What is the purpose of a Capital Projects Fund?
A) To account for debt payments
B) To account for major capital facilities financed with governmental resources
C) To record user fees
D) To manage pension assets
Answer: B
Capital Projects Funds track financial resources restricted, committed, or assigned for major
capital facilities. They help manage multi-year capital projects efficiently.
11. Debt Service Funds are required when:
A) Resources are unrestricted
B) Legal or contractual requirements mandate principal and interest payments
C) Government charges user fees
D) Resources are spent immediately
Answer: B
Debt Service Funds are used when legal requirements or earmarked revenues dictate payment of
debt obligations. They ensure proper tracking of debt service payments.
12. Permanent Funds are used to:
A) Record user fees for proprietary activities
B) Account for donated resources where only earnings may be spent
C) Track expenditures for capital projects
D) Pay debt obligations
Answer: B
Permanent Funds invest bequests or donations and restrict spending to earnings only. The
principal remains intact, benefiting government activities.
13. Proprietary funds are similar to the private sector because:
A) They only track taxes
B) They match revenues and expenses from the same transactions
C) They use modified accrual accounting
D) They cannot generate fees
Answer: B
Proprietary funds focus on matching revenues to expenses and typically charge fees for goods or
services. They use economic resources measurement focus and accrual accounting.
14. What are the two types of proprietary funds?
A) Enterprise and Internal Service Funds
B) Special Revenue and Debt Service Funds
C) Pension and Agency Funds
D) Permanent and Trust Funds
Answer: A
and Fiduciary Fund Accounting & Reporting
1. Which GASB Codification section establishes the foundational accounting and reporting
standards for state and local funds?
A) Section 1200
B) Section 1300
C) Section 1400
D) Section 1500
Answer: B
The GASB Codification Section 1300 provides the foundation for accounting and financial
reporting standards for state and local governmental funds. It guides the measurement focus,
basis of accounting, and reporting requirements.
2. Funds that are fiscal and accounting entities segregated for specific activities are called:
A) Accounts
B) Reserves
C) Fund
D) Trusts
Answer: C
Funds are separate fiscal and accounting entities established to track financial resources and
expenditures for specific purposes. They allow governments to ensure accountability and proper
resource management.
3. What are the three major categories of funds used by state and local governments?
A) Governmental, Proprietary, Fiduciary
B) General, Special, Permanent
C) Capital, Debt, Investment
D) Revenue, Expense, Trust
Answer: A
State and local governments classify their funds into governmental, proprietary, and fiduciary
categories to distinguish purposes and accounting requirements. Each category has its own
measurement focus and basis of accounting.
4. Governmental funds are traditionally used to account for:
A) Proprietary business activities
B) General services provided to the public
C) Private-purpose trusts
D) Investment pools
Answer: B
,Governmental funds account for services like public safety, health, transportation, social
services, and recreation. They focus on providing public services rather than generating profit.
5. What is the measurement focus and basis of accounting for governmental funds?
A) Economic resources, accrual basis
B) Current financial resources, modified accrual basis
C) Cash resources, cash basis
D) Fund equity, direct basis
Answer: B
Governmental funds use the current financial resources measurement focus and the modified
accrual basis of accounting. Expendable assets pay current liabilities, and fund balance
represents the difference.
6. Which of the following are types of governmental funds?
A) Enterprise, Internal Service
B) Pension, Agency, Investment Trust
C) General, Special Revenue, Capital Projects, Debt Service, Permanent
D) Restricted, Committed, Assigned, Unassigned
Answer: C
Governmental funds include the General Fund, Special Revenue Funds, Capital Projects Funds,
Debt Service Funds, and Permanent Funds. Each fund serves a specific purpose and adheres to
GASB standards.
7. The General Fund is primarily used to:
A) Account for debt payments
B) Account for restricted resources
C) Account for all financial resources not required to be in another fund
D) Account for user fees
Answer: C
The General Fund accounts for all financial resources not restricted to other funds. It is
considered the most important fund and typically holds most administrative services.
8. Common revenue sources for the General Fund include:
A) Sales taxes, property taxes, income taxes, permits, licenses, grants
B) User fees, enterprise charges
C) Pension contributions
D) Investment in trust funds
Answer: A
General Fund revenues come from property, sales, and income taxes, fees and permits,
intergovernmental grants, and fines or investment earnings. These resources fund public services.
9. Special Revenue Funds are used to:
A) Account for general administrative services
B) Report proceeds of major capital projects
C) Account for restricted or committed revenues for specific purposes
D) Record fiduciary assets
, Answer: C
Special Revenue Funds account for financial resources that are legally restricted or committed
for specific activities, except for major capital projects.
10. What is the purpose of a Capital Projects Fund?
A) To account for debt payments
B) To account for major capital facilities financed with governmental resources
C) To record user fees
D) To manage pension assets
Answer: B
Capital Projects Funds track financial resources restricted, committed, or assigned for major
capital facilities. They help manage multi-year capital projects efficiently.
11. Debt Service Funds are required when:
A) Resources are unrestricted
B) Legal or contractual requirements mandate principal and interest payments
C) Government charges user fees
D) Resources are spent immediately
Answer: B
Debt Service Funds are used when legal requirements or earmarked revenues dictate payment of
debt obligations. They ensure proper tracking of debt service payments.
12. Permanent Funds are used to:
A) Record user fees for proprietary activities
B) Account for donated resources where only earnings may be spent
C) Track expenditures for capital projects
D) Pay debt obligations
Answer: B
Permanent Funds invest bequests or donations and restrict spending to earnings only. The
principal remains intact, benefiting government activities.
13. Proprietary funds are similar to the private sector because:
A) They only track taxes
B) They match revenues and expenses from the same transactions
C) They use modified accrual accounting
D) They cannot generate fees
Answer: B
Proprietary funds focus on matching revenues to expenses and typically charge fees for goods or
services. They use economic resources measurement focus and accrual accounting.
14. What are the two types of proprietary funds?
A) Enterprise and Internal Service Funds
B) Special Revenue and Debt Service Funds
C) Pension and Agency Funds
D) Permanent and Trust Funds
Answer: A
