AGA Exam GAFRB Topic 2 Question 1 Discussion

Actual exam question for AGA's GAFRB exam

Question #: 1
Topic #: 2

The major difference in applying the accrual concept in governmental fund accounting, as opposed to private-sector accounting, is that revenues are

Arecognized in the accounting period in which they are received.

Brecorded when collectability occurs or can be reasonably estimated.

Crecognized when they become measurable and available.

Drecognized when an encumbrance order is prepared.
Governmental fund accounting uses the modified accrual basis of accounting. Under this basis, revenues are recognized when:
They are measurable (amount can be reasonably determined)
They are available (collectible within the current period or soon enough thereafter to pay current liabilities --- typically within 60 days)
This is the key difference from full accrual accounting, which recognizes revenue when it is earned, regardless of when received.
Relevant Reference:
GASB Statement No. 33 -- Accounting and Financial Reporting for Nonexchange Transactions
GASB Statement No. 34 -- Fund Accounting and Modified Accrual Basis
GASB Codification Section 1600 -- Fund Financial Reporting
Answer : C. recognized when they become measurable and available

Show Suggested Answer

Suggested Answer: C

by Silvana at Jul 05, 2025, 06:53 PM

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Ernest

6 days ago

I think the major difference in applying the accrual concept in governmental fund accounting is that revenues are recognized when they become measurable and available.

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Ahmed

12 days ago

The key difference here is the timing of revenue recognition. In governmental accounting, it's all about measurability and availability, not just when the cash is received.

upvoted 0 times

Shalon

6 days ago

That's right, in governmental fund accounting, revenues are recognized when they become measurable and available.

upvoted 0 times

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