AGA GAFRB Exam - 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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An

2 months ago

I thought it was when received? This is new info for me!

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Domitila

2 months ago

Totally agree, that's a big difference from private sector!

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Maile

3 months ago

Wait, so they only count revenue when it's "available"? That seems odd.

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Malika

3 months ago

Definitely C! It's all about that modified accrual basis.

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Tonette

3 months ago

Revenues in gov accounting are recognized when they're measurable and available.

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Carry

3 months ago

Definitely option C! The modified accrual basis is all about recognizing revenues when they are measurable and available, which is different from private-sector practices.

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Marion

4 months ago

I feel like I might be mixing up the definitions. Was it option B or C that talked about collectability? I need to double-check my notes on that.

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Lizbeth

4 months ago

I remember practicing a question similar to this where we discussed the differences between modified accrual and full accrual accounting. I think option C aligns with what we learned.

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Carylon

4 months ago

I think the key point is that revenues in governmental accounting are recognized when they are measurable and available, but I'm not entirely sure if that applies to all types of revenues.

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Edmond

4 months ago

This is a good test of my understanding of the modified accrual basis. I'm confident that option C is the correct answer based on the criteria described in the question stem.

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Galen

4 months ago

Hmm, I'm a little unsure about this one. The differences between governmental and private-sector accounting can be tricky. I'll re-read the question and review my notes to make sure I'm applying the right concepts.

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Adela

5 months ago

Okay, I think I got this. The key is that governmental funds use the modified accrual basis, so revenues are recognized when they are measurable and available, not just when they are earned like in private-sector accrual accounting. Option C looks like the right answer.

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Alaine

5 months ago

This question seems straightforward, but I want to make sure I understand the key differences between governmental and private-sector accounting. I'll review the concepts of modified accrual and measurable/available criteria.

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Edelmira

7 months ago

That's right, Ernest. It's all about ensuring that the revenue is collectible within a reasonable timeframe to cover current liabilities.

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Ernest

7 months ago

Actually, Emerson, in governmental fund accounting, revenues are recognized when they are measurable and available, not necessarily when they are received.

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Emerson

7 months ago

I'm not sure about that. I think revenues should be recognized in the accounting period in which they are received.

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Juliann

7 months ago

This question really tests our understanding of the core principles in governmental fund accounting. Option C is the way to go.

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Elbert

7 months ago

Haha, option D made me chuckle. Preparing an encumbrance order? That's like trying to collect rent from a ghost.

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Candra

5 months ago

I agree, option C is the correct one. Revenues need to be measurable and available in governmental fund accounting.

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Troy

6 months ago

Yeah, it's definitely not about preparing an encumbrance order. The key is when the revenues can be determined and collected.

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Cordelia

7 months ago

I know, option D does sound a bit funny. It's all about when the revenues become measurable and available.

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Edelmira

7 months ago

I agree with you, Ernest. It's important that revenues are collectible within the current period or soon enough to pay current liabilities.

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Antonio

7 months ago

I was a bit unsure at first, but the explanation about the modified accrual basis really clarifies things. Option C is the correct answer for sure.

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Vallie

6 months ago

Yes, it's all about when the revenues become measurable and available. Option C is definitely the right choice.

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Glennis

6 months ago

I agree, the modified accrual basis makes a big difference in how revenues are recognized in governmental fund accounting.

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Ernest

7 months 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

8 months 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.

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Shalon

6 months ago

I see, so the modified accrual basis of accounting in governmental fund accounting focuses on the timing of revenue recognition based on measurability and availability.

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Shalon

7 months ago

So it's not just about when the cash is received, but also about whether the revenue is collectible within the current period or soon enough to pay current liabilities.

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Shalon

7 months ago

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

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