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CPFO Accounting exam/COMPLETE SOLUTION

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Which of the following groups normally would NOT be considered a primary user of state or local government's general-purpose external financial statements? A. Citizens B. Legislative and oversight b... odies C. Management D. Investors and creditors - ANS-C - The primary users of general-purpose external financial statements are those who, unlike management, do not have direct access to accounting information. (page 6) (Chapter 1) Which of the following groups took the lead in setting generally accepted accounting principles (GAAP) for business enterprises? A. Businesses themselves B. State governments C. Federal government D. Independent auditors - ANS-D - Independent auditors took the lead in codifying GAAP in the private sector, whereas financial statement preparers took the lead in codifying GAAP in the public sector. (page 6) (Chapter 1) Which organization appoints the members of the Governmental Accounting Standards Board (GASB) A. Financial Accounting Foundation (FAF) B. Governmental Accounting Standards Advisory Council (GASAC) C. American Institute of Certified Public Accountants (AICPA) D. Securities and Exchange Commission (SEC) - ANS-A - The FAF appoints the members of both the FASB and the GASB (page 7) (Chapter 1) Which of the following has the LOWEST authoritative status on the GAAP hierarchy? A. Widely recognized and prevalent practices B. NCGA interpretations C. GASB Concept Statements D. The AICPA's audit and accounting guide for State and Local Governments - ANS-C - A GASB Concepts Statement is not part of the GAAP hierarchy as such, but rather constitutes an "other source" of GAAP. (page 14) (Chapter 1) Which of the following entities is NEVER subject to GASB jurisdiction? A. A hospital B. A college or university C. A utility D. None of the above - ANS-D - In 1989, the FAF categorically affirmed the GASB's jurisdiction over all entities operating in the public sector, including utilities, hospitals, colleges, and universities (page 9) (Chapter 1) [Show More]

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