Appendix 10: Answers to Reinforcement Quiz ñ Section III, Chapter 3
Answers to Reinforcement Quiz ñ Section III, Chapter 3
1. Which of the following provides guidance on determining appropriate
accounting for specific transactions at federal agencies?
a. the Chief Financial Officers Act of 1990
b. generally accepted accounting principles (GAAP)
c. the Association of Government Accountants
d. the Governmental Accounting Standards Board
Answer: (b). A hierarchy of GAAP is defined by Statement of Federal
Financial Accounting Standards 34. GAAP for federal entities guides
preparers and auditors to appropriate accounting for specific transactions.
2. Prior to the series of financial management reform laws that began in
1990 with the CFO Act, federal entities were not required to present
audited budgetary accounting reports annually. True or false?
Answer: True. Audits of financial statementsówhich include a Statement
of Budgetary Resourcesóbegan after the passage of the CFO Act in
3. The Federal Accounting Standards Advisory Board (FASAB) is the only
source for GAAP guidance for federal entities. True or false?
Answer: False. The GAAP hierarchy established by SFFAS 34 provides a
list of sources for accounting guidance. In all domains, the statement
ìÖthe determination that a particular accounting principle is generally
accepted may be difficult because no single reference source exists for all
such principlesî is true. Federal preparers and auditors may find suitable
references from a variety of sources.
4. Federal financial reporting objectives require FASAB to consider the
needs of which of the following groups when setting accounting
a. members of Congress and their staff
b. citizens
c. journalists
d. executive branch decision-makers
e. all of the above
Answer: (e). FASAB is concerned with meeting the needs of users both
internal and external to the government.
Online version, for personal use only AGA Study Guide 2, 2016 Edition

Appendix 10: Answers to Reinforcement Quiz ñ Section III, Chapter 3
5. Which of the following is NOT a federal financial reporting objective?
determining the financial value of government services
b. helping to assess the sustainability of government services
determining how the financial position of the federal government
changed during the period
d. determining the cost of government services during the period
Answer: (a). FASAB established four reporting objectives in its Concepts
Statement 1. They are: budgetary integrity, stewardship, operating
performance, and systems and controls. Items (b), (c) and (d) are each
addressed in those four broad objectives. FASAB has not determined that
federal financial reporting should include an assessment of the financial
value of government services. Nonetheless, FASAB has indicated that
performance reporting is a crucial element of financial reporting. This
would enable users to weigh the performance attained against the cost of
that performance.
6. FASAB is interested in the needs of internal users, such as program
managers, as well as external users, such as citizens. True or false?
Answer: True. FASABís mission requires it to consider internal usersí
needs. The CFO Act indicates that improved information for decision-
makers is one goal of the Act.
7. The systems and controls objective addresses the reliability of information
decision-makers use. True or false?
Answer: True. Users should be assured that transactions are recorded in
accordance with federal accounting standards and the information derived
from the system is reliable.
8. The operating performance objective focuses only on the overall result of
government operationsóthe federal deficit. True or false?
Answer: False. The operating performance objective requires standard
setters to focus on the cost of programs, the efficiency and effectiveness
of program management, and the use of resources.
9. Some federal entities produce Performance and Accountability Reports
address performance plans and measures of past performance.
b. include audited GAAP-based financial statements.
provide information on the entityís compliance with the Federal
Financial Management Improvement Act.
d. all of the above
Online version, for personal use only
AGA Study Guide 2, 2016 Edition

Appendix 10: Answers to Reinforcement Quiz ñ Section III, Chapter 3
Answer: (d). Performance and Accountability Reports are designed to
provide information in a single report that satisfies reporting requirements
of a variety of financial management laws, including the Chief Financial
Officers Act, Government Performance and Results Act, and Federal
Financial Management Improvement Act.
10.Federal financial reporting objectives can be met through a variety of
means. True or false?
Answer: True. FASAB recognized thatóin addition to audited financial
statementsósome objectives may be met through the performance
reporting requirements, and other reports, of the inspectors general.
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AGA CGFM Study Guide 2: Governmental Accounting, Financial Reporting and Budgeting