Pass the AGA Government Financial Manager GAFRB Questions and answers with ExamsMirror

A revolving fund is a fund established to finance a continuing cycle of operations where the receipts (e.g., fees or reimbursements) are used to finance future operations. These funds are usually self-sustaining and are designed to recover full costs of providing goods or services.

The described situation — an agency providing procurement services to other agencies and using collected fees to continue operations — is a classic example of an intragovernmental revolving fund (also called a working capital fund).

Relevant References:

OMB Circular A-11, Section 20 – Fund Classifications

GAO Glossary of Terms – Revolving Fund

FASAB SFFAS No. 7 – Revenue and Other Financing Sources

Answer: A. revolving fund

A governmental financial reporting entity includes:

The primary government

Legally separate organizations for which the primary government is financially accountable

Other organizations whose exclusion would render the financial statements misleading or incomplete (per GASB Statement No. 14 and No. 61)

Merely keeping records for an organization does not make it part of the financial reporting entity unless there is financial accountability or a significant relationship.

Relevant References:

GASB Statement No. 14 – The Financial Reporting Entity

GASB Statement No. 61 – Omnibus Amendments to GASB No. 14

GASB Codification Section 2100 – Reporting Entity

Answer: B. any organization for which records are kept by the primary government

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Footnotes (Notes to the Financial Statements) serve to clarify and provide additional detail about the financial statements. Key components include:

Summary of significant accounting policies (e.g., measurement focus, basis of accounting)

Details on capital assets, long-term liabilities, commitments, contingencies

Pension/OPEB disclosures

Not performance metrics or audit opinions (those are in MD&A and audit reports)

Relevant References:

GASB Codification Section 2300 – Notes to Financial Statements

GFOA Best Practices – Financial Reporting and Disclosure

Answer: C. a summary of significant accounting policies.

For state and local governments, GASB (Governmental Accounting Standards Board) is the authoritative standard-setting body. If a GASB principle exists, it must be followed, even if a FASB (Financial Accounting Standards Board) principle suggests a different approach.

FASB guidance may only be used in the absence of applicable GASB guidance — and even then, only when it does not conflict with governmental accounting objectives.

Relevant References:

GASB Statement No. 76 – The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments

GASB Concepts Statements

GAO and GFOA Reporting Manuals

Answer: A. the principle established by GASB