CGFO Accounting and Financial Reporting
1. What are the two most important financial documents in both public
and private organizations?: Budget and annual financial report.
2. What is the purpose of the accounting system?: To provide a record-
keeping framework in which to record (in journals) the transactions authorized by
the budget and to reconcile (in ledgers) their cumulative financial impact.
3. What are the six goals of accounting?: Provide financial information that
is: Understandable, reliable, relevant, comparable, consistent, and timely.
4. What are generally accepted accounting principles (GAAP)?: Standards
adopted by the accounting profession for recording and reporting transactions.
5. What is the role of the Governmental Accounting Standards Board
(GASB)?: To provide standards, interpretations, and technical bulletins for state
and local governments.
6. What are some topics of discussion concerning GAAP?: Basis of
accounting, treatment of fixed assets, and long-term debt.
7. What is one benefit of standardizing the accounting system?:
Comparisons can be made across governments and conclusions drawn on the
relative financial health of each.
8. What is another benefit of standardizing the accounting system?: Users
can interpret financial reports more easily.
9. What is the most important benefit of standardizing the accounting
system?: Assuring users that a common set of rules is being applied to reporting
financial operations.
10. What is the purpose of the operating budget?: To plan for spending and
expected revenues.
11. What is the purpose of the capital budget?: To plan for spending on long-
term assets.
12. What is the purpose of the accounting system?: To record financial
transactions authorized by the budget.
13. What is the purpose of journals in the accounting system?: To record
transactions.
, CGFO Accounting and Financial Reporting
14. What is the purpose of ledgers in the accounting system?: To reconcile
the cumulative financial impact of transactions.
15. What is the role of generally accepted accounting principles (GAAP)?:
To guide the recording, reconciling, and reporting of transactions. 16. What is
GAAP?: Generally Accepted Accounting Principles
17. What are the goals of GAAP?: Accuracy, reliability, and consistency in
reporting
18. How do businesses and governments report their results differently?:
Businesses consolidate results, governments report by funds
19 What is a fund in governmental accounting?: A fiscal and accounting entity
with a self-balancing set of accounts
20. How do funds function in governmental accounting?: Like self-contained
businesses with their own accounts and financial reports
21. What is Principle #1 of governmental accounting?: Maintain accounts on a
GAAP basis and comply with finance-related legal requirements
22. What is Principle #2 of governmental accounting?: Funds must be the
basis for maintaining accounting records
23. What is Principle #3 of governmental accounting?: Identify and define the
eleven basic types of funds used in governmental accounting
24. What is Principle #4 of governmental accounting?: Maintain a minimum
number of funds and only those required by law
25. What is Principle #5 of governmental accounting?: Maintain a distinction in
accounting records among capital assets of different funds
26. What is Principle #6 of governmental accounting?: Maintain historical cost
of capital assets and long-term debt in accounting records
27. What is Principle #7 of governmental accounting?: Record depreciation of
capital assets in accounting records
28. What is Principle #8 of governmental accounting?: Maintain a clear
distinction between long-term liabilities of specific funds and the general
government 29. What is Principle #9 of governmental accounting?: Use
accrual basis for government-wide financial statements and modified accrual
basis for fund-specific financial statements
30. What is Principle #10?: Annual budget adoption and comparison with
actual results.
31. What is Principle #11?: Recognition and reporting of interfund transfers
depending on reciprocity.
, CGFO Accounting and Financial Reporting
32. What is Principle #12?: Use of common terminology and classification
system. 33. What is Principle #13?: Preparation of interim financial reports and
CAFR follows specified format.
34. What is the difference between accounting methods in government and
private sector?: Government uses modified accrual method for certain funds.
35. Why is governmental accounting more complex than private-sector
accounting?: Multiple funds and differential accounting bases.
36. How is a fund defined?: Fiscal entity with self-balancing accounts.
37. How can a fund be conceptually viewed?: Legal entity with inflows and
outflows of financial resources.
38. What happens when inflows exceed outflows in a fund?: Fund
accumulates a balance.
39 What happens when there is a net outflow in a fund?: Reduction in fund
balance.
40. Where do funds receive revenue from?: Different sources.
41. How are funds typically created?: By law or executive fiat.
42. How many funds can a government have?: Anywhere from less than 10 to
several hundred.
43. What are the three broad categories in which funds are grouped?:
Governmental, proprietary, and fiduciary.
44. What is the largest and most important operating fund?: General Fund.
45. What is the purpose of the General Fund?: To account for and report all
financial resources not accounted for in another fund.
46. What are the types of Governmental Funds?: General Fund, Special
Revenue, Debt Service Funds, Capital Projects Funds, Permanent funds.
47. What are the types of Proprietary (Business-type) Funds?: Enterprise
Funds, Internal Service Funds.
48. What are the types of Fiduciary Funds?: Investment Trust Funds, Private-
purpose Trust Funds, Pension Trust Funds, Agency Funds.
49. What are special revenue funds?: Funds established to account for
specific revenue sources.
50. What is the purpose of special revenue funds?: To segregate revenue for
specific purposes and ensure compliance.
51. What is the role of the operating budget in special revenue funds?: It
provides authorization for the use of funds.
52. What are debt service funds?: Funds that account for resources used for
principal and interest payments on long-term debt.
1. What are the two most important financial documents in both public
and private organizations?: Budget and annual financial report.
2. What is the purpose of the accounting system?: To provide a record-
keeping framework in which to record (in journals) the transactions authorized by
the budget and to reconcile (in ledgers) their cumulative financial impact.
3. What are the six goals of accounting?: Provide financial information that
is: Understandable, reliable, relevant, comparable, consistent, and timely.
4. What are generally accepted accounting principles (GAAP)?: Standards
adopted by the accounting profession for recording and reporting transactions.
5. What is the role of the Governmental Accounting Standards Board
(GASB)?: To provide standards, interpretations, and technical bulletins for state
and local governments.
6. What are some topics of discussion concerning GAAP?: Basis of
accounting, treatment of fixed assets, and long-term debt.
7. What is one benefit of standardizing the accounting system?:
Comparisons can be made across governments and conclusions drawn on the
relative financial health of each.
8. What is another benefit of standardizing the accounting system?: Users
can interpret financial reports more easily.
9. What is the most important benefit of standardizing the accounting
system?: Assuring users that a common set of rules is being applied to reporting
financial operations.
10. What is the purpose of the operating budget?: To plan for spending and
expected revenues.
11. What is the purpose of the capital budget?: To plan for spending on long-
term assets.
12. What is the purpose of the accounting system?: To record financial
transactions authorized by the budget.
13. What is the purpose of journals in the accounting system?: To record
transactions.
, CGFO Accounting and Financial Reporting
14. What is the purpose of ledgers in the accounting system?: To reconcile
the cumulative financial impact of transactions.
15. What is the role of generally accepted accounting principles (GAAP)?:
To guide the recording, reconciling, and reporting of transactions. 16. What is
GAAP?: Generally Accepted Accounting Principles
17. What are the goals of GAAP?: Accuracy, reliability, and consistency in
reporting
18. How do businesses and governments report their results differently?:
Businesses consolidate results, governments report by funds
19 What is a fund in governmental accounting?: A fiscal and accounting entity
with a self-balancing set of accounts
20. How do funds function in governmental accounting?: Like self-contained
businesses with their own accounts and financial reports
21. What is Principle #1 of governmental accounting?: Maintain accounts on a
GAAP basis and comply with finance-related legal requirements
22. What is Principle #2 of governmental accounting?: Funds must be the
basis for maintaining accounting records
23. What is Principle #3 of governmental accounting?: Identify and define the
eleven basic types of funds used in governmental accounting
24. What is Principle #4 of governmental accounting?: Maintain a minimum
number of funds and only those required by law
25. What is Principle #5 of governmental accounting?: Maintain a distinction in
accounting records among capital assets of different funds
26. What is Principle #6 of governmental accounting?: Maintain historical cost
of capital assets and long-term debt in accounting records
27. What is Principle #7 of governmental accounting?: Record depreciation of
capital assets in accounting records
28. What is Principle #8 of governmental accounting?: Maintain a clear
distinction between long-term liabilities of specific funds and the general
government 29. What is Principle #9 of governmental accounting?: Use
accrual basis for government-wide financial statements and modified accrual
basis for fund-specific financial statements
30. What is Principle #10?: Annual budget adoption and comparison with
actual results.
31. What is Principle #11?: Recognition and reporting of interfund transfers
depending on reciprocity.
, CGFO Accounting and Financial Reporting
32. What is Principle #12?: Use of common terminology and classification
system. 33. What is Principle #13?: Preparation of interim financial reports and
CAFR follows specified format.
34. What is the difference between accounting methods in government and
private sector?: Government uses modified accrual method for certain funds.
35. Why is governmental accounting more complex than private-sector
accounting?: Multiple funds and differential accounting bases.
36. How is a fund defined?: Fiscal entity with self-balancing accounts.
37. How can a fund be conceptually viewed?: Legal entity with inflows and
outflows of financial resources.
38. What happens when inflows exceed outflows in a fund?: Fund
accumulates a balance.
39 What happens when there is a net outflow in a fund?: Reduction in fund
balance.
40. Where do funds receive revenue from?: Different sources.
41. How are funds typically created?: By law or executive fiat.
42. How many funds can a government have?: Anywhere from less than 10 to
several hundred.
43. What are the three broad categories in which funds are grouped?:
Governmental, proprietary, and fiduciary.
44. What is the largest and most important operating fund?: General Fund.
45. What is the purpose of the General Fund?: To account for and report all
financial resources not accounted for in another fund.
46. What are the types of Governmental Funds?: General Fund, Special
Revenue, Debt Service Funds, Capital Projects Funds, Permanent funds.
47. What are the types of Proprietary (Business-type) Funds?: Enterprise
Funds, Internal Service Funds.
48. What are the types of Fiduciary Funds?: Investment Trust Funds, Private-
purpose Trust Funds, Pension Trust Funds, Agency Funds.
49. What are special revenue funds?: Funds established to account for
specific revenue sources.
50. What is the purpose of special revenue funds?: To segregate revenue for
specific purposes and ensure compliance.
51. What is the role of the operating budget in special revenue funds?: It
provides authorization for the use of funds.
52. What are debt service funds?: Funds that account for resources used for
principal and interest payments on long-term debt.
