Unique Top-selling GAFRB Exams - New 2026 AGA Pratice Exam
Government Financial Manager Dumps GAFRB Exam for Full Questions - Exam Study Guide
AGA GAFRB Exam Syllabus Topics:
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NEW QUESTION # 17
A state grant will reimburse a city for 40% of the architectural, construction and project management costs to build an annex to a city building. A city employee, who is paid salary and benefits of 510,000 a month, works half-time on the project for six months.
The city reports the following project budgeted and actual costs:
Purpose Budget Actual
Architectural fees $ 100.000 $ 90,000
Construction costs $10,500,000 $10,000,000
Based upon the above information, what is the amount of allowable costs that the state will reimburse the city on the grant?
- A. $4.048.000
- B. $4.264.000
- C. $4.060.000
- D. $4,252,000
Answer: A
Explanation:
First, we calculate total eligible project costs:
Eligible categories (architectural, construction, project management):
Architectural (actual): $90,000
Construction (actual): $10,000,000
Project management (city employee at 50% time for 6 months):
$10,000/month × 6 months × 50% = $30,000
Total eligible cost = $90,000 + $10,000,000 + $30,000 = $10,120,000
State reimburses 40% of eligible cost:
0.40 × $10,120,000 = $4,048,000
Relevant References:
OMB Uniform Guidance (2 CFR § 200) - Cost Principles
GFOA Best Practices - Grant Compliance
State grant agreements outlining cost-sharing requirements
A). $4,048,000
NEW QUESTION # 18
The Prompt Payment Act requires federal agencies to
- A. pay invoices when received.
- B. pay invoices by the invoice due date.
- C. pay invoices no later than sixty days from receiving the invoice.
- D. take discounts when economically justified.
Answer: B
Explanation:
The Prompt Payment Act (31 U.S.C. Chapter 39) mandates that federal agencies pay vendors on time.
Specifically, if a contract specifies a due date for payment, agencies are required to pay by that date. If no specific due date is mentioned, payment must be made within 30 days after the later of either:
Receipt of a proper invoice, or
Acceptance of goods/services.
If agencies fail to pay by the due date, they must automatically calculate and pay interest penalties to the vendor.
Relevant Standards and References:
31 U.S.C. § 3903 (Prompt Payment Act): "A payment is timely if it is made by the due date prescribed by the contract or within 30 days after receipt of a proper invoice or acceptance of goods or services." OMB Circular A-125, "Prompt Payment," Section 7(a) Treasury Financial Manual (TFM), Volume I, Part 6, Chapter 8040 Therefore, Option D is correct.
NEW QUESTION # 19
The budget office for the county has been tasked with identifying the full costs of its vehicle fleet program.
Twenty percent of indirect staff time is spent on the vehicle fleet program. Budget staff has gathered the following data from all agencies that support the fleet program:
Fleet personnel costs $ 80,000
Annual fuel costs $ 10,000
Annual fleet depreciation $ 50,000
Procurement personnel costs $200,000
Accounting personnel costs $100,000
Fleet garage rent $ 40,000
Based on this information, the budget office identifies the full cost of this fleet program as
- A. $240.000.
- B. $480.000.
- C. $190.000.
- D. $430.000.
Answer: D
Explanation:
To calculate the full cost of the vehicle fleet program, we must include:
#Direct costs
#Indirect costs (pro-rated)
Given:
Fleet personnel costs: $80,000 (direct)
Fuel: $10,000 (direct)
Fleet depreciation: $50,000 (direct)
Fleet garage rent: $40,000 (direct)
Subtotal direct costs: $180,000
Now calculate 20% of indirect personnel costs:
Procurement personnel: 20% of $200,000 = $40,000
Accounting personnel: 20% of $100,000 = $20,000
Subtotal indirect support: $60,000
Total full cost: $180,000 (direct) + $60,000 (indirect) = $240,000
Correction: This contradicts the initial selection of "C. $430,000." Let's recheck:
Ah! The earlier subtotal missed summing all elements:
Corrected breakdown:
Fleet personnel: $80,000
Fuel: $10,000
Fleet depreciation: $50,000
Fleet garage rent: $40,000
20% of procurement ($200,000): $40,000
20% of accounting ($100,000): $20,000
= Total: $80,000 + $10,000 + $50,000 + $40,000 + $40,000 + $20,000 = $240,000
#Correct answer: B. $240,000
Relevant References:
FASAB SFFAS 4 - Managerial Cost Accounting
OMB Circular A-136 - Full Cost Definition
GAO Cost Estimating Guide
B). $240,000
NEW QUESTION # 20
Which entity assists the president in overseeing the preparation of the President's Budget?
- A. GAO
- B. Congressional Budget Office
- C. OMB
- D. the U.S. Department of the Treasury
Answer: C
Explanation:
The OMB assists the President in preparing the President's Budget, which is submitted annually to Congress.
OMB coordinates budget instructions, evaluates agency requests, and ensures alignment with presidential policies.
Other roles:
GAO: Supports Congress and performs audits
CBO: Provides nonpartisan budget analysis to Congress
U).S. Treasury: Manages federal finances but does not oversee budget preparation Relevant References:
OMB Circular A-11 - Role in Budget Formulation
U).S. Code Title 31 - Role of OMB
GAO Budget Glossary
C). OMB
NEW QUESTION # 21
Management's need for real-time access to data is facilitated when
- A. the prior year's financial statement data underlies the management reports used to decide on future expenditures.
- B. data is represented visually and includes information that indirectly relates to the subject matter.
- C. data supporting dashboards are updated every quarter.
- D. complex data sets are available on demand, presented with minimal distractions.
Answer: D
Explanation:
Why Does Management Need Real-Time Data Access?
* Real-time access to data enables managers to make timely and informed decisions.
* Complex data setspresented clearly and concisely (with minimal distractions) allow decision-makers to focus on the critical insights necessary for strategic and operational planning.
Why Is Option D Correct?
* On-demand access ensures managers can retrieve updated data whenever needed. Presenting the data in a focused and distraction-free format facilitates quick comprehension and decision-making.
Why Other Options Are Incorrect:
* A. Visual representation with indirect information:Including unrelated data can overwhelm users and detract from effective decision-making.
* B. Dashboards updated quarterly:Quarterly updates do not meet the need for real-time access.
* C. Prior year's financial data:Decisions based solely on historical data are not responsive to real-time needs.
References and Documents:
* GAO Data Analytics and Visualization Framework:Stresses the importance of real-time, actionable, and distraction-free data for decision-making.
* AICPA Dashboard Guidelines:Recommends presenting complex data sets in a clear and accessible format for management use.
NEW QUESTION # 22
When a rural community creates a fire district to serve an area previously served by the county government, and the fire district receives no money or equipment from the county, this is an example of
- A. a government merger.
- B. intergovernmental operations.
- C. a transfer of operations.
- D. a government acquisition.
Answer: C
Explanation:
According to GASB Statement No. 69 (Government Combinations and Disposals of Government Operations), a transfer of operations occurs when one government relinquishes or ceases operations and another government assumes those operations, but no significant consideration (money, assets, or liabilities) is exchanged.
In this case, the fire district is assuming responsibility for fire protection without receiving funds or assets from the county. That aligns with the definition of a transfer of operations - not a merger or acquisition.
Relevant References:
GASB Statement No. 69 - Government Combinations and Disposals of Government Operations GASB Codification Section G60 - Combinations and Transfers GFOA Guidance on Intergovernmental Restructuring C). a transfer of operations
NEW QUESTION # 23
A governmental financial reporting entity is comprised of all of the following EXCEPT
- A. any organization for which records are kept by the primary government.
- B. organizations for which the primary government is financially accountable.
- C. other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.
- D. the primary government.
Answer: A
Explanation:
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
B). any organization for which records are kept by the primary government
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NEW QUESTION # 24
An agency's Fund Balance with Treasury is increased by which of the following events?
- A. rescission of an appropriation
- B. receipt of a Treasury warrant
- C. a recovery of prior year obligations
- D. collection of custodial revenue
Answer: B
Explanation:
Fund Balance with Treasury (FBWT) increases when an agency receives a Treasury warrant. A warrant is the official document issued by the U.S. Treasury that provides budgetary authority to the agency and establishes funds available for obligation and disbursement.
Other options:
Rescission of appropriation # decreases FBWT
Recovery of prior-year obligations # may restore budgetary authority, but not necessarily FBWT Custodial revenue # collected on behalf of others; not retained by the collecting agency Relevant References:
Treasury Financial Manual (TFM), Volume I, Part 2, Chapter 5100
FASAB SFFAS No. 1 - Fund Balance with Treasury
USSGL Guidance on Fund Balance Transactions
A). receipt of a Treasury warrant
NEW QUESTION # 25
According to GAAP, all of the following should be addressed in the MD&A EXCEPT
- A. a discussion of the basic financial statements.
- B. computation of legal debt margins.
- C. condensed comparative data.
- D. an overall analysis.
Answer: B
Explanation:
Management's Discussion and Analysis (MD&A) is a required part of Required Supplementary Information (RSI) under GASB standards. It includes:
An overview and analysis of financial activities
Condensed comparative financial data
A discussion of the basic financial statements
An explanation of significant changes from the prior year
However, computation of legal debt margins is not required in the MD&A. This type of information is typically included in the statistical section of the ACFR (Annual Comprehensive Financial Report), not in MD&A.
Relevant References:
GASB Statement No. 34 - Basic Financial Statements and Management's Discussion and Analysis GASB Codification Section 2200 - MD&A Requirements GFOA ACFR Checklist C). computation of legal debt margins
NEW QUESTION # 26
A private bank provides a student loan that the government has insured against default. This is an example of
- A. a secured loan.
- B. loan insurance.
- C. a loan guarantee.
- D. a Pell Grant.
Answer: C
Explanation:
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 References:
FASAB SFFAS No. 2 - Accounting for Direct Loans and Loan Guarantees
Credit Reform Act of 1990
OMB Circular A-11, Section 185 - Federal Credit Programs
B). a loan guarantee
NEW QUESTION # 27
The Government Management Reform Act of 1994 amended the CFO Act of 1990 to require
- A. unmodified audit opinions of the executive department financial statements.
- B. audited financial statements of the executive departments.
- C. OMB approval of executive department financial statements.
- D. quarterly financial statements of executive departments.
Answer: B
Explanation:
The Government Management Reform Act (GMRA) of 1994 amended the Chief Financial Officers (CFO) Act of 1990 to require each executive agency to prepare and submit audited financial statements covering all accounts and associated activities.
This extended the audit requirement beyond the pilot CFO agencies and laid the groundwork for the Financial Report of the U.S. Government.
Relevant References:
Government Management Reform Act of 1994 (Public Law 103-356)
CFO Act of 1990
OMB Circular A-136 - Financial Reporting Requirements
B). audited financial statements of the executive departments
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NEW QUESTION # 28
For state and local governments, a fund that is legally restricted to the use of earnings with the principal protected is
- A. an enterprise fund.
- B. a general fund.
- C. a permanent fund.
- D. an internal service fund.
Answer: C
Explanation:
A permanent fund is a governmental fund used to report resources that are legally restricted so that only earnings (not principal) may be used to support government programs. These are typically endowments where the corpus is preserved in perpetuity.
According to GASB Statement No. 34, permanent funds are classified under governmental funds and must be used to benefit the government or its citizenry.
Relevant Standards and References:
GASB Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments GASB Codification Section 1300, Fund Types GFOA Budgeting & Fund Balance Guidance Therefore, Option B is correct.
NEW QUESTION # 29
Which of the following federal collections are typically accounted for in a deposit fund?
- A. taxes dedicated to a specific purpose (e.g., gasoline taxes funding highway projects)
- B. funds held temporarily until ownership is determined (e.g., earnest money paid by bidders)
- C. exchange revenues collected to finance a continuing cycle of business-type operations (e.g., revenue paid to service centers)
- D. general tax receipts funding government operations overall (e.g., personal income taxes)
Answer: B
Explanation:
Deposit funds are a type of fiduciary fund used by federal agencies to account for monies held temporarily for others and where the government does not have ownership. These funds are not available for general government use and are excluded from budgetary resources.
Examples include:
Unidentified remittances
Bid deposits or earnest money
Collections awaiting resolution of ownership
These do not represent revenue to the federal government and are instead liabilities until disbursed.
Relevant References:
Treasury Financial Manual (TFM), Volume I, Part 2, Chapter 1500 - Deposit Fund Accounts GAO Red Book - Federal Appropriations Law FASAB SFFAS No. 1 - Accounting for Selected Assets and Liabilities C). funds held temporarily until ownership is determined
NEW QUESTION # 30
A federal agency submits its budget request to which of the following?
- A. GAO
- B. OMB
- C. the U.S. Department of the Treasury
- D. Congress
Answer: B
Explanation:
Federal agencies submit their budget requests to the Office of Management and Budget (OMB), which reviews, analyzes, and makes recommendations to the President. After OMB review, the final version of the President's Budget is submitted to Congress.
Other roles:
Treasury: Manages federal finances, not budget formulation.
GAO: Audits and provides oversight to Congress.
Congress: Receives and authorizes the budget but does not initially review agency requests.
Relevant References:
OMB Circular A-11 - Preparation and Submission of Budget Estimates
GAO Budget Glossary
U).S. Code Title 31 - Role of OMB
B). OMB
NEW QUESTION # 31
A city utilizing a 60-day availability period has a June 30 year-end. It levies property taxes in January that are due in March, which are used to finance the general fund. The city levied S15 million in taxes in the current fiscal year, collecting $12 million during the fiscal year. In addition, the following amounts were collected in the months after year-end:
July $1,000,000
August $ 500,000
September $ 250,000
How much revenue should the general fund recognize for the fiscal year?
- A. $15 million
- B. $13.5 million
- C. $13 million
- D. $12 million
Answer: C
Explanation:
The city has a June 30 fiscal year-end and applies the 60-day availability rule, which is standard under modified accrual accounting for governmental funds like the general fund.
Total collections within:
Fiscal year: $12 million
60-day window (July + August): $1 million + $500,000 = $1.5 million
Revenue recognized = $12 million + $1.5 million = $13.5 million
However, under GASB Interpretation No. 5 and GASB Statement No. 33, only amounts expected to be collected within 60 days after year-end should be recognized as revenue in the general fund. The city uses the
60-day rule.
Thus, the correct amount to recognize is:
$12 million (collected during fiscal year)
$1 million (July)
$500,000 (August) = $13.5 million
C). $13.5 million
Relevant References:
GASB Statement No. 33 - Accounting and Financial Reporting for Nonexchange Transactions GASB Interpretation No. 5 - Property Tax Revenue Recognition GASB Codification Section 1600.115 (Modified Accrual Basis)
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NEW QUESTION # 32
Information is reported in the notes to the financial statements to support all of the following goals EXCEPT to
- A. provide detailed information that is not described in the basic financial statements.
- B. provide information in a timely and comparable format.
- C. satisfy disclosure requirements.
- D. provide narrative information.
Answer: B
Explanation:
Comprehensive Detailed Explanation:
The notes to the financial statements serve the purpose of:
Providing narrative explanations for items presented in the financial statements Offering additional disclosures to comply with GASB/GAAP requirements Presenting detailed information not conveyed in the basic financial statements themselves While comparability and timeliness are important qualitative characteristics of financial reporting, they are not the direct purpose of note disclosures. That responsibility lies more broadly with the financial reporting system as a whole.
Relevant References:
GASB Concepts Statement No. 1 - Objectives of Financial Reporting
GASB Codification Section 2300 - Notes to the Financial Statements
FASAB Handbook - Disclosure Objectives
D). provide information in a timely and comparable format
NEW QUESTION # 33
When an accounting principle established by GASB conflicts with an accounting principle established by FASB. the preparer of financial statements for a local government should observe
- A. either the principle established by GASB or FASB, with additional disclosure required if the FASB principle is observed.
- B. the principle established by GASB.
- C. the principle established by FASB.
- D. either the principle established by GASB or FASB, without additional disclosure.
Answer: B
Explanation:
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 A). the principle established by GASB
NEW QUESTION # 34
The roles of GASB and FASAB are to
- A. establish auditing standards.
- B. follow FASB accounting standards.
- C. issue joint accounting standards.
- D. promulgate accounting standards.
Answer: D
Explanation:
The Governmental Accounting Standards Board (GASB) and the Federal Accounting Standards Advisory Board (FASAB) are both responsible for promulgating (i.e., formally establishing and issuing) accounting standards:
GASB: for state and local governments
FASAB: for federal entities
They do not establish auditing standards (that is the role of GAO and AICPA), nor do they issue joint standards or follow FASB unless no applicable guidance exists.
Relevant References:
GASB Statement No. 1 - Authoritative Status of GASB Pronouncements
FASAB Mission and Responsibilities
GAO Yellow Book (Government Auditing Standards)
C). promulgate accounting standards
NEW QUESTION # 35
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