Exam (elaborations)
CGFM Exam #2 - Governmental Accounting Questions and Answers
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CGFM Exam #2 - Governmental Accounting Questions and Answers
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CGFM Exam #2 - GovernmentalAccounting Questions and Answers
Reasons Governments are not Run Like Businesses - Answers -1) Goals and
objectives differ considerably from those in the private sector.
2) Exists to provide services, not gain profits.
3) Goals and objectives are sometimes established with input from the public.
4) Resources are derived primarily from taxes; there are no shareholders.
5) No single measure of success; can't use increasing market share, earnings per
share, or the fact that it is still in business like private sector corporations.
6) Legally bound by budget.
7) Must provide reports that demonstrate compliance.
Government Budget - Answers -Establishes spending authorizations, outlines programs
and services to be provided, and defines the sources of revenues that will be used to
fund them. Specifies restrictions on the use of resources.
Private Sector Budget - Answers -Guide to operations. Used as a benchmark for
performance, goals for growth, or as a management tool for planning.
Financial Reporting - Answers -Primary mechanism by which public officials are able to
demonstrate accountability.
Accountability - Answers -In gov't, it is the cornerstone of financial reporting. Based on
the belief that the gov't has a responsibility to report, the public has a right to know, and
the ultimate power belongs to the people.
Legal Accountability - Answers -The need to comply with various laws, rules and
regulations.
Performance accountability - Answers -Ensure that gov'ts. act in an efficient, effective or
economic manner. Ensure that goals and objectives are met.
Citizens and Taxpayers - Answers -Use financial statements to concentrate on the
gov'ts accountability for the management of public tax dollars. Concerned with operating
results.
Investors and Creditors - Answers -Use financial reports to determine compliance with
contractual agreements related to debt issues; to assure monies are being treated in a
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