GFOA CPFO Exam - Topic 8 Question 83 Discussion

Actual exam question for GFOA's CPFO exam

Question #: 83
Topic #: 8

[All CPFO Questions]

Small local governments and nonprofits use a third accounting basis, the cash basis, unapproved by GAAP. Cash accounting is used because ____________ accounting, though more accurate, is more complex and costly.

ADeferral

BAccrual

CModified

DBoth B & C

Show Suggested Answer

Suggested Answer: B

by Jennie at Mar 19, 2024, 04:52 PM

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Francis

3 months ago

I’m surprised cash basis is still a thing in 2023!

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Ammie

3 months ago

Cash basis is just easier for small budgets, no doubt.

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Frederic

3 months ago

Wait, I thought modified was the simpler option?

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Kenneth

4 months ago

Totally agree, accrual is a pain to manage.

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Arlene

4 months ago

It's definitely accrual accounting that's more complex!

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Dahlia

4 months ago

I’m a bit confused. I thought modified accounting was a mix of cash and accrual, but I can't recall if it’s the right answer here. Maybe I should go with B?

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Florinda

4 months ago

I practiced a similar question last week, and I think it was definitely about accrual accounting being more complex. So, I’m leaning towards B.

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Curt

4 months ago

I'm not entirely sure, but I remember something about modified cash basis being simpler than accrual. Maybe it's D, both B & C?

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Nickolas

5 months ago

I think the answer might be B, accrual accounting, since it involves recognizing revenues and expenses when they occur, not just when cash changes hands.

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Candida

5 months ago

Based on my understanding, cash accounting focuses on when cash is received and paid, while accrual accounting records transactions when they occur, regardless of cash flow. Since the question mentions cash accounting is "more accurate," I'm guessing the answer is accrual accounting.

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Jolanda

5 months ago

Okay, I know cash accounting is simpler and less costly than accrual accounting, which is the standard approved by GAAP. I think the answer has to be accrual or modified accrual, since those are more complex than just cash.

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Desirae

5 months ago

Hmm, I'm a little unsure about the differences between the accounting bases mentioned here. I'll need to think through the key characteristics of each one to determine the best answer.

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Quentin

5 months ago

This seems like a straightforward question about the differences between cash and accrual accounting. I'm pretty confident I can figure this out.

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Cortney

5 months ago

I'm a bit confused by the wording of this question. Is it asking why cash accounting is used, or what the more accurate accounting basis is? I'll need to re-read it carefully to make sure I understand what they're looking for.

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Annelle

5 months ago

I'm a little confused by the wording of this question. Is it asking about the overall design process or just the specific type of prototype being used? I'll have to re-read it a few times to make sure I understand what they're looking for.

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Lenna

5 months ago

Price fixing sounds right - it's when competitors agree on pricing, which is exactly what the question describes.

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Lyda

5 months ago

Okay, let me think this through. The question is asking about the importance of the Standardized Service Contract principle, and how it defines the assembly of service candidates. I think I can work with that.

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Alita

5 months ago

I feel like SFTP is more secure, but the question specifically says to use a server-admin role, which confuses me...

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Louann

10 months ago

Deferral, accrual, modified - it's like a linguistic dance party up in here. I'll stick with option B and C, thank you very much.

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Herman

8 months ago

User 3

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Irving

8 months ago

User 2

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Ma

9 months ago

User 1

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Beckie

10 months ago

Modified accounting? Sounds like they're trying to have their cake and eat it too. Why not just go full cash and call it a day?

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Kanisha

9 months ago

It's a balance between accuracy and simplicity for organizations that may not have the resources for full accrual accounting.

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Flo

10 months ago

Using modified accounting can help small local governments and nonprofits have a better understanding of their financial situation without the complexity of full accrual accounting.

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Socorro

10 months ago

Modified accounting allows for some elements of accrual accounting while still keeping things simpler with cash basis.

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Merissa

10 months ago

I'm all about that cash, that cash, no accrual. Seriously, who has time for all that deferral mumbo-jumbo when you're trying to balance the town budget?

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