Toggle Sidebar Find Previous Next Page: of 5 Print Tools Zoom Out Zoom In Automatic Zoom Actual Size Page Fit Page Width 50% 75% 100% 125% 150% 200% 300% 400% APPENDIX 10 Online version, for personal use only Appendix 10: Answers to Reinforcem ent Quiz – Section I, Chapter 1 1 AGA Study Guide 2, 2016 Edition Answers to Reinforcement Quiz – Section I, Chapter 1 1. Describe at least three ways governm ents differ from organizations in the private sector. Answer:  Governments are established through legal means.  Governments have no profit motive.  Governments raise revenue primarily through taxes.  Governments have no shareholders.  Governments rely on the budget pr ocess to allocate resources.  Governing bodies of many governments are elected by the public.  Governments provide many services that are not available in the private sector. 2. The budget is essential to gover nment financial management. True or false? Answer: True. Governments are legal ly bound by appropriations. The budget establishes spending authority, outlines programs and services to be provided to the public, and defines the resources that are to be used. 3. Which of the following is not a type of accountability used in government? a. operational accountability b. legal accountability c. profit accountability d. performance accountability Answer: Profit accountability (c) is not a type of accountability. Governments are not creat ed to make a profit. 4. The executive branch is only acc ountable to the public. True or false? Answer: False. The executive branch is also accountable to the legislative branch for spending resource s in accordance with legislative mandates. 5. Describe the concept of interperiod equity. Answer: Current-year revenues should be sufficient to pay for current- year services. Current-year services should not be financed by future year taxpayers. Online version, for personal use only Appendix 10: Answers to Reinforcem ent Quiz – Section I, Chapter 1 2 AGA Study Guide 2, 2016 Edition 6. Which basis of accounting cannot be used to demonstrate the concept of interperiod equity? a. cash basis b. accrual basis c. modified accrual basis Answer: The cash basis (a) of accounting cannot be used because transactions are recorded only based on the inflows and outflows of cash. The period in which the revenue was ear ned or liability incurred is not taken into consideration. 7. For which of the following does general purpose financial reporting not assist users? a. assessing accountability b. making economic decisions c. making lease-purchase decisions d. making political decisions Answer: Financial reporting does not a ssist users in making lease- purchase decisions (c). These decisions are made based on specific requirements. 8. Program managers have little need for financial statements. True or false? Answer: False. The needs of program managers focus on day-to-day operations and the delivery of services. Managers also review financial statements to ensure they are oper ating within budget ary parameters, legal restrictions and regul ations, and public policy. 9. Describe the types of r eports produced by governments. Answer: General purpose, external financial reports are prepared primarily to demonstrate accountability . They consist of the financial statements that have been audited by external auditors, along with additional supplementary information. Financial reporting is much broader; it includes internal reports used to manage operations; reports to grantor agencies; offering statements, when governments issue debt; proj ect reports; and popular reports. In addition to financial reports, govern ments issue reports that focus on performance measures, many of whic h may be non-financial in nature. Online version, for personal use only Appendix 10: Answers to Reinforcem ent Quiz – Section I, Chapter 1 3 AGA Study Guide 2, 2016 Edition 10. Ensuring an accounting principle is used from one year to another is an example of what financial reporting characteristic? a. reliability b. comparability c. consistency d. relevancy Answer: Consistency (c). Reliability means information is verifiable and free from bias. Comparability means that like entities report the same information in the same way. Relevancy means the information can be used to assess a conditi on, event or problem. 11. Before financial reports are comp leted, all information pertaining to financial condition and results of oper ation should be available. True or false?...

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AGA CGFM Study Guide 2: Governmental Accounting, Financial Reporting and Budgeting