GFOAT CGFO Glossary 1-100 Exam
Questions and Answers Graded A+
Account - Correct answer-A separate financial reporting unit for budgeting,
management, or accounting purposes. All budgetary transactions, whether revenue
or expenditure, are recorded in accounts. Several related accounts may be grouped
together in a fund. A list of the accounts into which money can be put or taken is
called the chart of accounts.
Accounting Standards - Correct answer-The generally accepted accounting
principles (GAAP) promulgated by the Governmental Accounting Standards Board
that guide the recording and reporting of financial information by state and local
governments. The standards establish such guidelines as when transactions are
recognized (accrual, modified accrual, or cash basis), the types and purposes of
funds, and the content and organization of the annual financial report. At the
federal level, accounting standards are developed by the Federal Accounting
Standards Advisory Board.
Accrual Basis - Correct answer-Refers to when a financial transaction is recorded.
Accrual is a method of accounting in which revenues are recorded when
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,measurable and earned, and expenses are recognized when a good or service is
used. For example, professional fees is an expense that recognizes the use of
services from attorneys, engineers, etc. In the case of modified accrual accounting,
expenditures are recognized when the goods or services are received and revenues,
such as taxes, are recognized when measurable and available to pay expenditures
in the current accounting period. See Basis of Accounting.
Accrued Interest - Correct answer-In the sale of a new issue of municipal bonds,
the dollar amount, based on the stated rate or rates of interest, which has accrued
on the bonds from the dated date, or other stated date, up to but not to including the
date of delivery. When a bond is purchased in the secondary market, the dollar
amount, based upon the stated rate of interest, which has accrued on the bond from
the most recent interest payment date, up to but not including the date of
settlement. Accrued interest is paid to the seller by the purchaser and is usually
calculated on a 360-day-year basis (assumes each month has 30 days). See Interest.
Activity - Correct answer-Departmental efforts that contribute toward the
accomplishment of specific, identified program objectives.
Additional Bonds Test - Correct answer-Refers to legal test found in resolution or
ordinance securing bonds; governs ability to issue additional bonds having the
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, same lien on pledged revenues. Usually expressed as a ratio in which historic
earnings meet certain levels of future debt service coverage.
Ad Valorem Tax - Correct answer-A direct tax based "according to value" of
property. Counties and school districts and municipalities usually are, and special
tax districts may be, authorized by law to levy ad valorem taxes on property other
than intangible personal property. Local governmental bodies with taxing power
may issue bonds or short-term certificates payable from ad valorem taxation. See
Tax. Compare Excise Tax; Special Assessment.
Advance Refunding - Correct answer-The refinancing of outstanding bonds by the
issuance of a new issue of bonds prior to the date on which the outstanding bonds
become due or are callable. Accord ingl y, for a period of time, both the issue being
refunded and the refunding issue are outstanding.Bonds are "escrowed to maturity"
when the proceeds of the refunding bonds are deposited in escrow for investment
in federal securities in an amount sufficient to pay, when due, the principal of and
interest on the issue being refunded. Bonds are considered "pre-refunded" when the
refunding bond proceeds are escrowed only until the call day of the refunded issue.
The Internal Revenue Code restricts the yield which may be earned on investment
of the proceeds of refunding bonds.
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Questions and Answers Graded A+
Account - Correct answer-A separate financial reporting unit for budgeting,
management, or accounting purposes. All budgetary transactions, whether revenue
or expenditure, are recorded in accounts. Several related accounts may be grouped
together in a fund. A list of the accounts into which money can be put or taken is
called the chart of accounts.
Accounting Standards - Correct answer-The generally accepted accounting
principles (GAAP) promulgated by the Governmental Accounting Standards Board
that guide the recording and reporting of financial information by state and local
governments. The standards establish such guidelines as when transactions are
recognized (accrual, modified accrual, or cash basis), the types and purposes of
funds, and the content and organization of the annual financial report. At the
federal level, accounting standards are developed by the Federal Accounting
Standards Advisory Board.
Accrual Basis - Correct answer-Refers to when a financial transaction is recorded.
Accrual is a method of accounting in which revenues are recorded when
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,measurable and earned, and expenses are recognized when a good or service is
used. For example, professional fees is an expense that recognizes the use of
services from attorneys, engineers, etc. In the case of modified accrual accounting,
expenditures are recognized when the goods or services are received and revenues,
such as taxes, are recognized when measurable and available to pay expenditures
in the current accounting period. See Basis of Accounting.
Accrued Interest - Correct answer-In the sale of a new issue of municipal bonds,
the dollar amount, based on the stated rate or rates of interest, which has accrued
on the bonds from the dated date, or other stated date, up to but not to including the
date of delivery. When a bond is purchased in the secondary market, the dollar
amount, based upon the stated rate of interest, which has accrued on the bond from
the most recent interest payment date, up to but not including the date of
settlement. Accrued interest is paid to the seller by the purchaser and is usually
calculated on a 360-day-year basis (assumes each month has 30 days). See Interest.
Activity - Correct answer-Departmental efforts that contribute toward the
accomplishment of specific, identified program objectives.
Additional Bonds Test - Correct answer-Refers to legal test found in resolution or
ordinance securing bonds; governs ability to issue additional bonds having the
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, same lien on pledged revenues. Usually expressed as a ratio in which historic
earnings meet certain levels of future debt service coverage.
Ad Valorem Tax - Correct answer-A direct tax based "according to value" of
property. Counties and school districts and municipalities usually are, and special
tax districts may be, authorized by law to levy ad valorem taxes on property other
than intangible personal property. Local governmental bodies with taxing power
may issue bonds or short-term certificates payable from ad valorem taxation. See
Tax. Compare Excise Tax; Special Assessment.
Advance Refunding - Correct answer-The refinancing of outstanding bonds by the
issuance of a new issue of bonds prior to the date on which the outstanding bonds
become due or are callable. Accord ingl y, for a period of time, both the issue being
refunded and the refunding issue are outstanding.Bonds are "escrowed to maturity"
when the proceeds of the refunding bonds are deposited in escrow for investment
in federal securities in an amount sufficient to pay, when due, the principal of and
interest on the issue being refunded. Bonds are considered "pre-refunded" when the
refunding bond proceeds are escrowed only until the call day of the refunded issue.
The Internal Revenue Code restricts the yield which may be earned on investment
of the proceeds of refunding bonds.
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