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AGA - GAFRB - High-quality Valid Examination 2: Governmental Accounting, Financial Reporting and Budgeting (GAFRB) Practice Questions

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LatestCram is a leading provider of top-quality Examination 2: Governmental Accounting, Financial Reporting and Budgeting (GAFRB) (GAFRB) preparation material for the GAFRB test. Our Examination 2: Governmental Accounting, Financial Reporting and Budgeting (GAFRB) (GAFRB) exam questions are designed to help customers get success on the first try. These latest AGA GAFRB Questions are the result of extensive research by a team of professionals with years of experience.

AGA GAFRB Exam Syllabus Topics:

Topic
Details

Topic 1

Federal Financial Accounting and Reporting: This section of the exam measures skills of government financial analysts and covers the roles of FASAB, OMB, Treasury, and GAO in federal accounting. It includes an understanding of federal budgetary terminology and the federal budgetary equation. The section differentiates between budgetary and proprietary accounting and outlines the structure and use of various federal fund types. It explains how to record key budgetary transactions like appropriations and obligations and proprietary transactions such as payroll and depreciation.

Topic 2

State and Local Financial Accounting and Reporting: This section of the exam measures skills of public sector accountants and focuses on applying GASB standards to define reporting entities and component units. It explores the structure and purpose of various fund types and the basis of accounting for each. Candidates must understand the format and content of the Annual Comprehensive Financial Report and the purpose of popular reports for public transparency.

Topic 3

Governmental Financial Accounting, Reporting and Budgeting: General Knowledge:This section of the exam measures skills of government financial analysts and covers the unique aspects of governmental accounting that distinguish it from private sector practices, such as service over profit and the critical role of the budget. It emphasizes the objectives of financial reporting in the public sector, the role of standard-setting bodies like GASB, FASB, FASAB, and IPSASB, and the due process for setting accounting standards. It also includes knowledge of interperiod equity, budgetary compliance, sustainability, and the characteristics of quality financial information.

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AGA Examination 2: Governmental Accounting, Financial Reporting and Budgeting (GAFRB) Sample Questions (Q14-Q19):

NEW QUESTION # 14
The quarterly inventory record below has been provided for use in preparing the organization's financial statements. Based upon the information provided, what method of inventory valuation is used by the organization?

A. FIFO
B. LIFO
C. average cost
D. net weight scale

Answer: C

Explanation:
The organization's inventory records show that the beginning and ending amounts and values change each month, and the relationship between units and dollar values suggests that the cost per unit is averaged, not fixed (as with FIFO or LIFO). Let's evaluate January:
Beginning: 1,200 units / $2,400 # $2.00 per unit
Purchased: 800 units / $2,000 # $2.50 per unit
Ending: 600 units / $1,500 # $2.50 per unit
The ending value of $1,500 for 600 units gives a per-unit cost of $2.50, matching the purchase cost in January. This suggests the system uses a weighted average cost method rather than tracking the specific cost layers (as FIFO or LIFO would).
Relevant References:
FASAB SFFAS No. 3 - Accounting for Inventory and Related Property
GAAP and GASB guidelines on inventory valuation
GFOA Best Practices - Inventory and Supply Chain Management
B). average cost

NEW QUESTION # 15
According to GASB, the costs of which of the following activities associated with internally generated computer software should be capitalized?

A. testing the software for functionality and ease of use
B. training employees to use the software
C. selecting between alternatives for the software project
D. converting extra data not needed to make the software work

Answer: A

Explanation:
According to GASB Statement No. 51 - Accounting and Financial Reporting for Intangible Assets, costs associated with internally generated computer software can be capitalized only during the "application development stage." Activities in this stage that are capitalizable include:
Coding
Software configuration
Testing (for functionality)
Non-capitalizable activities include:
Preliminary project planning (e.g., selecting between alternatives)
Data conversion not necessary for the software to operate
Training employees
Therefore, testing the software for functionality is an activity that should be capitalized.
Relevant References:
GASB Statement No. 51
GFOA Best Practices - Capitalization of Intangible Assets
C). testing the software for functionality and ease of use

NEW QUESTION # 16
A state had problems with its cash reconciliation resulting in a difference between the total cash per books versus cash balance with banks. The possible loss could only be estimated within a range of $100 million to
$300 million with no amount within the range considered a better estimate than any other. The state should recognize a minimum liability of

A. $300 million with no additional disclosure required.
B. $200 million and disclose in the notes the exposure to an additional $100 million loss.
C. $100 million and disclose in the notes the exposure to an additional $200 million loss.
D. an amount to be determined by external auditors.

Answer: C

Explanation:
GASB Statement No. 62 (based on FASB ASC 450-20) provides guidance on recognizing loss contingencies.
If a loss is probable and the amount can only be estimated as a range, and no single amount within the range is better, the minimum amount in the range should be accrued.
The remainder of the range should be disclosed in the notes to the financial statements.
Thus:
Accrue: $100 million
Disclose: Additional exposure up to $200 million
Relevant References:
GASB Statement No. 62 - Paragraph 96
GAAP Implementation Guide - Loss Contingencies
AICPA Audit Guide - Government Auditing Standards
A). $100 million and disclose in the notes the exposure to an additional $200 million loss

NEW QUESTION # 17
If a capital project has an estimated life of 30 years, which financing method is designed to impose the cost of the project on the generation who benefits from it?

A. 30-year zero-coupon bonds, without a sinking fund
B. 30-year serial bonds
C. pay-as-you-go financing
D. 30-year term bonds, without a sinking fund

Answer: B

Explanation:
Serial bonds mature in installments over the life of the bond (e.g., every year or every few years). This structure allows the cost of repaying the debt to align more closely with the periods in which the capital asset is used - achieving intergenerational equity by spreading the cost over the same span as the asset's useful life.
Term bonds, zero-coupon bonds, and pay-as-you-go do not align costs with benefits across multiple years in the same way.
Relevant References:
GFOA Best Practices - Debt Management and Capital Planning
GASB Concepts Statement No. 1 - Interperiod Equity
MSRB Educational Materials on Bond Types
A). 30-year serial bonds

NEW QUESTION # 18
Federal agencies accumulate and report costs in order to perform all of the following EXCEPT to

A. achieve an unmodified audit opinion.
B. comply with the CFO Act.
C. comply with the GPRA.
D. comply with SFFAS #4.

Answer: A

Explanation:
Federal agencies accumulate and report costs for a number of reasons, including:
Compliance with GPRA (Government Performance and Results Act), which links budgeting to performance Compliance with the CFO Act, which mandates preparation of auditable financial statements Compliance with SFFAS No. 4 - Managerial Cost Accounting, which requires cost accumulation for decision- making and performance evaluation While accurate cost reporting supports audit quality, achieving an unmodified audit opinion is not the primary reason for accumulating costs - it is an outcome, not a purpose.
Relevant References:
FASAB SFFAS No. 4 - Managerial Cost Accounting
CFO Act of 1990
GPRA Modernization Act of 2010
C). achieve an unmodified audit opinion

NEW QUESTION # 19
......

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Sid King Sid King

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