Most Recent AGA GAFRB Exam Dumps

Prepare for the AGA Examination 2: Governmental Accounting, Financial Reporting and Budgeting exam with our extensive collection of questions and answers. These practice Q&A are updated according to the latest syllabus, providing you with the tools needed to review and test your knowledge.

QA4Exam focus on the latest syllabus and exam objectives, our practice Q&A are designed to help you identify key topics and solidify your understanding. By focusing on the core curriculum, These Questions & Answers helps you cover all the essential topics, ensuring you're well-prepared for every section of the exam. Each question comes with a detailed explanation, offering valuable insights and helping you to learn from your mistakes. Whether you're looking to assess your progress or dive deeper into complex topics, our updated Q&A will provide the support you need to confidently approach the AGA GAFRB exam and achieve success.

The questions for GAFRB were last updated on Apr 20, 2026.

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Question No. 1

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$100 million and disclose in the notes the exposure to an additional $200 million loss.

B$200 million and disclose in the notes the exposure to an additional $100 million loss.

C$300 million with no additional disclosure required.

Dan amount to be determined by external auditors.
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 Reference:
GASB Statement No. 62 -- Paragraph 96
GAAP Implementation Guide -- Loss Contingencies
AICPA Audit Guide -- Government Auditing Standards
Answer : A. $100 million and disclose in the notes the exposure to an additional $200
million loss

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Correct Answer: A

Question No. 2

Which of the following revenue sources is an exchange-like transaction?

Aincome taxes

Boperating permits

Cfines

Dgrants

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Correct Answer: B

Exchange and exchange-like transactions occur when each party receives and gives up essentially equal value. In the case of operating permits (e.g., business licenses or environmental permits), the payer receives a direct and proportional benefit in exchange for the fee paid, making this an exchange-like transaction.

In contrast:

Income taxes and fines are non-exchange revenues.

Grants may or may not be exchange-like, depending on stipulations, but generally are non-exchange.

Relevant Standards and Reference:

GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions

GASB Codification Section N50, Nonexchange Transactions

GFOA Best Practices -- Revenue Recognition

Therefore, Option B is correct.

Question No. 3

State and local governments account for budgeted and actual expenditures to ensure that

Acash is available to pay bills when they come due.

BGASB standards are met when producing the basic financial statements.

Cactual expenditures are used to formulate next year's budget.

Dspending conforms to legal requirements.
State and local governments adopt legally binding budgets and are required to monitor compliance with those budgets. Budget-to-actual comparisons help ensure that public funds are spent only as authorized by the legislative body. This supports the core accountability principle of public sector financial reporting.
While budgets can also support planning and cash flow, the primary purpose of tracking budgeted vs. actual expenditures is legal compliance.
Relevant Reference:
GASB Statement No. 34 -- Budgetary Comparison Schedules
GFOA -- Budget Monitoring and Compliance
GAO Red Book -- Legal Requirements for Public Spending
Answer : D. spending conforms to legal requirements.

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Correct Answer: D

Question No. 4

Interest accrued on the public debt is reported as

Aa receipt.

Ban outlay.

Ca cost of goods sold.

Da tax expenditure.
Interest accrued on the public debt (e.g., Treasury securities) is considered a government expenditure. In federal financial reporting and budgeting, this is classified as an outlay, representing a payment made to meet an obligation.
It is not a receipt (revenues collected), a cost of goods sold (used in commercial accounting), or a tax expenditure (which refers to revenue foregone due to deductions, credits, etc.).
Relevant Reference:
OMB Circular A-11 -- Budgetary Definitions
Treasury Financial Manual (TFM) -- Federal Outlay Reporting
GAO Glossary -- Public Debt Interest Treatment
Answer : B. an outlay

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Correct Answer: B

Question No. 5

A legally separate organization for which the elected officials of the primary government are financially accountable describes a

Afiscally dependent organization.

Bcomponent unit.

Cjoint venture entity.

Djointly governed organization.

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Correct Answer: B

A component unit is a legally separate entity for which the elected officials of the primary government are financially accountable. This accountability may arise if the primary government:

Appoints a majority of the governing board, and

Is able to impose its will or has the potential to receive financial benefits or bear financial burdens.

Component units are reported in the financial statements of the primary government, either as blended or discretely presented entities.

Relevant Standards and Reference:

GASB Statement No. 14, The Financial Reporting Entity

GASB Statement No. 61, The Financial Reporting Entity: Omnibus

GASB Codification Section 2100: Defining the Financial Reporting Entity

Therefore, Option B is correct.

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