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AGA CGFM Exam - Topic 3 Question 69 Discussion

Actual exam question for AGA's CGFM exam
Question #: 69
Topic #: 3
[All CGFM Questions]

The Parking Fund for a government entity has the following information in its Statement of Net Position. Calculate the current ratio.

Total current assets $1,320

Total non-current assets $8,100

Total assets $9,420

Total current liabilities $ 810

Total non-current liabilities $ 360

Total liabilities $1,170

Total net position $8,250

Show Suggested Answer Hide Answer
Suggested Answer: D

What Is the Current Ratio?

The current ratio measures an entity's ability to cover its short-term liabilities with its short-term assets. The formula is: CurrentRatio=TotalCurrentAssetsTotalCurrentLiabilitiestext{Current Ratio} = frac{text{Total Current Assets}}{text{Total Current Liabilities}}CurrentRatio=TotalCurrentLiabilitiesTotalCurrentAssets

Calculation:

Total Current Assets = $1,320

Total Current Liabilities = $810

CurrentRatio=1,320810text{Current Ratio} = frac{1,320}{810}CurrentRatio=8101,320 CurrentRatio1.63text{Current Ratio} 1.63CurrentRatio1.63

Why the Current Ratio Matters:

A current ratio above 1 indicates that the entity has more current assets than current liabilities, suggesting good short-term liquidity.

Why Other Options Are Incorrect:

A . 0.61, B. 0.98, C. 1.14: These values result from incorrect calculations or misinterpretations of the formula.

Reference and Documents:

GAO Financial Analysis Guide: Provides guidance on using the current ratio to assess liquidity.

GASB Financial Reporting Requirements: Highlights the importance of liquidity measures in government financial statements.


by Yoko at Apr 03, 2025, 02:04 PM

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Jade
2 months ago
Totally agree, 1.14 sounds more accurate!
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Nu
2 months ago
Wait, are we sure about those numbers? Seems off.
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Lashanda
2 months ago
Current ratio is calculated as current assets divided by current liabilities.
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Tracey
3 months ago
Nope, it's definitely not that high.
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Anjelica
3 months ago
I think it's 1.63, right?
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Veronika
3 months ago
I feel like I might be overthinking this. The current ratio should definitely be greater than 1 if the assets are sufficient, but I can’t remember the exact calculation steps.
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Vilma
3 months ago
I practiced a similar question last week, and I think the answer was around 1.14, but I’m not confident about the exact numbers here.
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Twila
4 months ago
I think the current ratio is just current assets divided by current liabilities, right? So it should be $1,320 divided by $810.
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Dalene
4 months ago
I remember we calculated the current ratio in class, but I’m not entirely sure if I should include non-current assets in this calculation.
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Emile
4 months ago
I think I've got it figured out. The current ratio is calculated as current assets divided by current liabilities. Based on the information given, the current ratio is 0.98. I'm confident in this answer.
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Carin
4 months ago
Wait, I'm not sure I'm following this correctly. Shouldn't we be looking at the total assets and total liabilities to calculate the current ratio? This seems too straightforward.
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Luisa
4 months ago
No problem, I've got this. The current assets are $1,320 and the current liabilities are $810, so the current ratio is 1.63. Easy peasy!
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Ira
5 months ago
Hmm, I'm a little confused. Where exactly are the current assets and liabilities in this information? I don't see them labeled as such.
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Elza
5 months ago
Okay, I've got this. The current ratio is just current assets divided by current liabilities, so I'll need to find those values from the data provided.
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Teddy
9 months ago
Hey, as long as they're not charging us an arm and a leg for parking, I'm good with it. Though I'm pretty sure the current ratio is still going to be higher than my parking ticket fees.
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Nobuko
9 months ago
Wait, wait, wait... you're telling me the government entity has a 'Parking Fund'? I didn't realize they also owned a multi-level garage downtown.
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Esteban
8 months ago
User 3: I think the current ratio is 1.14.
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Catherin
9 months ago
User 2: I know, right? I wonder how they manage that.
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Latonia
9 months ago
User 1: Yeah, it's interesting that they have a 'Parking Fund'.
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Shantay
10 months ago
What is this, a trick question? The current ratio should be A) 0.61. I know my accounting principles inside and out.
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Hassie
8 months ago
I'm not sure, but I think it might be C) 1.14. Can someone confirm?
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Loreen
8 months ago
No way, it has to be A) 0.61. That's the correct answer.
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Idella
8 months ago
I think the current ratio is actually B) 0.98.
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Curtis
10 months ago
Hold on, I'm getting a different result. I think the answer is D) 1.63. Time to break out the calculator and verify this.
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Louvenia
9 months ago
I agree with D) 1.63 after double-checking.
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Frederica
9 months ago
I calculated it as B) 0.98.
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Rashida
10 months ago
I think the answer is A) 0.61.
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Regenia
10 months ago
Based on the information given, the current ratio is 1.63, which is option D.
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Elenor
10 months ago
I agree, let's use the formula Current Ratio = Total Current Assets / Total Current Liabilities.
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Aileen
10 months ago
Hmm, I think B) 0.98 is the correct answer. The question is asking for the current ratio, and that seems to fit the numbers provided.
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Barrie
9 months ago
Great, B) 0.98 it is for the current ratio.
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Bernardo
10 months ago
Let's go with B) 0.98 then.
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Malissa
10 months ago
I think so too, the current assets and liabilities match up with that ratio.
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Jaleesa
10 months ago
I agree, B) 0.98 seems to be the right choice.
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Regenia
10 months ago
I think we need to calculate the current ratio for the Parking Fund.
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Krystina
10 months ago
The current ratio is definitely C) 1.14. I've double-checked the calculations and that's the only option that makes sense.
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Tresa
10 months ago
I'm positive it's C) 1.14. The numbers add up perfectly.
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Rochell
10 months ago
Are you sure about that? I think it might be D) 1.63.
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