CGFM EXAM 2 2026 FINAL ASSESSMENT
PAPER FINANCIAL ADMINISTRATION
COMPREHENSIVE QUESTIONS AND ANSWERS
VERIFIED A+
◉ What was the primary focus of the previous accounting model
before GASB Statement 34? Answer: The previous model focused on
legal compliance and fiscal accountability, primarily on a cash basis.
◉ What is the role of the Governmental Accounting Standards Board
(GASB)? Answer: GASB establishes generally accepted accounting
principles (GAAP) for state and local governments.
◉ What is required for state and local governments to receive an
unmodified audit opinion? Answer: They must prepare financial
reports in accordance with GAAP.
◉ What are the primary users of financial reports for state and local
governments? Answer: Public officials, credit rating agencies,
investors, and creditors.
◉ What is the paramount objective of financial reporting according
to GASB? Answer: To provide information that assists users in
assessing accountability.
,◉ What does interperiod equity refer to in governmental financial
reporting? Answer: It refers to determining whether current-year
revenues were sufficient to pay for current-year services.
◉ What was the GASB established under? Answer: The oversight of
the Financial Accounting Foundation's Board of Trustees (FAF) in
1984.
◉ What did GASB's first statement initiate? Answer: The codification
of accounting standards for state and local governments.
◉ What is the codification in the context of GASB? Answer: An
integration of currently effective accounting and financial reporting
standards for state and local governments.
◉ What is the significance of Concepts Statement 1? Answer: It sets
forth the framework used by GASB in establishing accounting
standards.
◉ What should financial reporting demonstrate regarding a
governmental entity's budget? Answer: It should demonstrate
compliance with the entity's legally adopted budget and other
finance-related legal requirements.
, ◉ What information should financial reporting provide about a
governmental entity's financial position? Answer: It should indicate
whether the entity's financial position improved or deteriorated due
to the year's operations.
◉ What is the relationship between GASB and the Financial
Accounting Standards Board (FASB)? Answer: GASB has authority
over state and local governments, while FASB has authority over all
other non-federal entities.
◉ What is the purpose of financial reporting in terms of service
efforts? Answer: To assist users in assessing the service efforts and
accomplishments of the governmental entity.
◉ What should financial reporting provide information about
regarding financial resources? Answer: It should provide
information about sources and uses of financial resources.
◉ How does GASB affect governments that wish to issue debt?
Answer: Credit rating agencies encourage these governments to
provide audited financial statements prepared in accordance with
GAAP.
◉ What is a key aspect of the accountability objective in financial
reporting? Answer: It should assist in fulfilling the government's
duty to be publicly accountable.
PAPER FINANCIAL ADMINISTRATION
COMPREHENSIVE QUESTIONS AND ANSWERS
VERIFIED A+
◉ What was the primary focus of the previous accounting model
before GASB Statement 34? Answer: The previous model focused on
legal compliance and fiscal accountability, primarily on a cash basis.
◉ What is the role of the Governmental Accounting Standards Board
(GASB)? Answer: GASB establishes generally accepted accounting
principles (GAAP) for state and local governments.
◉ What is required for state and local governments to receive an
unmodified audit opinion? Answer: They must prepare financial
reports in accordance with GAAP.
◉ What are the primary users of financial reports for state and local
governments? Answer: Public officials, credit rating agencies,
investors, and creditors.
◉ What is the paramount objective of financial reporting according
to GASB? Answer: To provide information that assists users in
assessing accountability.
,◉ What does interperiod equity refer to in governmental financial
reporting? Answer: It refers to determining whether current-year
revenues were sufficient to pay for current-year services.
◉ What was the GASB established under? Answer: The oversight of
the Financial Accounting Foundation's Board of Trustees (FAF) in
1984.
◉ What did GASB's first statement initiate? Answer: The codification
of accounting standards for state and local governments.
◉ What is the codification in the context of GASB? Answer: An
integration of currently effective accounting and financial reporting
standards for state and local governments.
◉ What is the significance of Concepts Statement 1? Answer: It sets
forth the framework used by GASB in establishing accounting
standards.
◉ What should financial reporting demonstrate regarding a
governmental entity's budget? Answer: It should demonstrate
compliance with the entity's legally adopted budget and other
finance-related legal requirements.
, ◉ What information should financial reporting provide about a
governmental entity's financial position? Answer: It should indicate
whether the entity's financial position improved or deteriorated due
to the year's operations.
◉ What is the relationship between GASB and the Financial
Accounting Standards Board (FASB)? Answer: GASB has authority
over state and local governments, while FASB has authority over all
other non-federal entities.
◉ What is the purpose of financial reporting in terms of service
efforts? Answer: To assist users in assessing the service efforts and
accomplishments of the governmental entity.
◉ What should financial reporting provide information about
regarding financial resources? Answer: It should provide
information about sources and uses of financial resources.
◉ How does GASB affect governments that wish to issue debt?
Answer: Credit rating agencies encourage these governments to
provide audited financial statements prepared in accordance with
GAAP.
◉ What is a key aspect of the accountability objective in financial
reporting? Answer: It should assist in fulfilling the government's
duty to be publicly accountable.
