Government, public, private and not-for-profit entities all share which common goal of financial reporting?
Answer(s): A
Despite differences in sector goals, all entities--public, private, nonprofit, or government--use financial reporting to provide information that assists stakeholders in making informed decisions.While private-sector entities focus on profitability and governmental entities focus on accountability and stewardship, both require decision-useful financial data.Relevant
FASAB SFFAC No. 1 Objectives of Federal Financial ReportingGASB Concepts Statement No. 1 Objectives of Financial ReportingFASB Statement of Financial Accounting Concepts No. 1Answer : A . provide users with decision support
Which of the following events requires both a proprietary and a budgetary accounting entry?
Answer(s): B
This is the point when a proprietary entry and a budgetary entry must both be recorded:Proprietary entry: To record the asset (e.g., equipment) and recognize the payableBudgetary entry: To move from unpaid obligation (Undelivered Orders) to paid obligation (Delivered Orders)Receiving goods/services triggers both the accrual of the expense and the update of the obligation's status in the budgetary accounts.Relevant
FASAB SFFAS No. 1 Accounting for Selected Assets and LiabilitiesTreasury Financial Manual, Part 2, Ch. 4700 Proprietary vs. Budgetary AccountingGAO Red Book Appropriations LawAnswer : B . A contracting officer's representative receives delivery of previously ordered printers.
A federal entity would record a payment of a payable in which of the following journal entries?
Answer(s): D
When a federal entity pays off a payable:Budgetary accounting moves the status of the obligation from unpaid to paidProprietary accounting reduces the payable and cash (Fund Balance with Treasury)The correct journal entry is:Budgetary:Debit Delivered Orders Obligations, UnpaidCredit Delivered Orders Obligations, PaidProprietary:Debit Accounts PayableCredit Fund Balance with TreasuryThis reflects the transition from an unpaid liability to a disbursed payment, complying with federal financial reporting.Relevant
Treasury Financial Manual (TFM) Vol. I, Part 2, Chapter 4700FASAB SFFAS No. 1 and No. 7 Accounting for Liabilities and Budgetary ResourcesUSSGL (U.S. Standard General Ledger) Posting Logic for Obligation TransactionsAnswer : D. Debit Delivered Orders Obligations, Unpaid; Credit Delivered Orders Obligations, Paid; Debit Accounts Payable; Credit Fund Balance with Treasury
Which of the following situations may cause contingent liabilities?
Comprehensive DetailedA contingent liability is a potential obligation that may arise depending on the outcome of a future event. A building containing asbestos represents a situation where a liability may be incurred if the asbestos must be removed due to safety regulations, public health concerns, or legal requirements.Unlike realized losses (e.g., from asset sales or impairments), contingent liabilities depend on future events and uncertainty.Relevant
FASAB SFFAS No. 5 Accounting for Liabilities of the Federal GovernmentGASB Statement No. 62 Codification of Accounting and Financial Reporting GuidanceGAO Red Book Contingent Liabilities ExamplesAnswer : B . building with asbestos
A private bank provides a student loan that the government has insured against default. This is an example of
When a private bank issues a student loan that is insured by the government in case of default, the federal government is acting as a guarantor--not issuing the loan directly, but promising repayment to the lender if the borrower defaults. This is a classic example of a federal loan guarantee program.Loan guarantees are off-budget unless called, and the government only incurs a liability if the student defaults.Relevant
FASAB SFFAS No. 2 Accounting for Direct Loans and Loan GuaranteesCredit Reform Act of 1990OMB Circular A-11, Section 185 Federal Credit ProgramsAnswer : B . a loan guarantee
Post your Comments and Discuss Financial GAFRB exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the GAFRB content, but please register or login to continue.