GFOA CPFO Exam - Topic 9 Question 118 Discussion

Actual exam question for GFOA's CPFO exam

Question #: 118
Topic #: 9

[All CPFO Questions]

GAAP do not specify how much fund balance to set aside, but the_________ recommends that local governments maintain a reserve of (1) 5% to 15% of general fund reserves or (2) at least 1-2 months general fund operating expenditures.

AGFUA (Government Finance officers Association)

BState bank

CFederal reserves Board

DAll of there

Show Suggested Answer

Suggested Answer: A

by Loren at Nov 24, 2025, 01:57 PM

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Detra

10 hours ago

5% to 15% sounds about right for reserves.

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Casie

6 days ago

I thought it was the Federal Reserve Board.

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Reita

11 days ago

It's definitely the GFUA that recommends those percentages!

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Patria

16 days ago

Haha, I bet the person who wrote "GFUA" is the same one who thinks the Federal Reserve Board sets GAAP standards. Classic!

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Albina

21 days ago

B) State bank? Really? That's a new one. I thought this was a GAAP question, not a banking exam.

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Rikki

26 days ago

I'm going with D) All of the above. Why not cover all our bases, right?

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Goldie

1 month ago

Definitely A. I always get confused between GFOA and GFUA, but this time I'm sure it's the GFOA.

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Alton

1 month ago

A) GFOA (Government Finance Officers Association) is the correct answer.

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Lonna

1 month ago

I’m pretty certain it’s A) GFUA. We practiced a question like this where they emphasized the importance of maintaining a reserve for local governments.

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Hyun

2 months ago

I’m not confident, but I think it could also be B or C. I remember similar questions about reserve requirements, but I can't recall the exact details.

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Margarita

2 months ago

I feel like we discussed this in class, and I vaguely recall that the GFUA had specific percentages for reserves. So, I’m leaning towards A as well.

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Mignon

2 months ago

I'm drawing a blank on which specific organization provides those fund balance recommendations. Is it the state banking regulators or the Federal Reserve? I'll have to think this through carefully before selecting an answer.

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Josephine

2 months ago

Okay, I remember learning about this in my government accounting class. The GFOA is the professional association that issues best practice recommendations for local governments, including the 5-15% or 1-2 months of operating expenses guideline for fund balances. I feel pretty confident about this one.

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Kris

2 months ago

I think the answer might be A) GFUA, but I’m not completely sure. I remember something about them recommending fund balance guidelines.

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Celeste

3 months ago

Wait, are we sure about the GFUA? Seems a bit off.

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Elinore

3 months ago

Hmm, I'm a bit confused by this question. I know GAAP doesn't specify an exact amount, but I'm not sure which organization actually provides the recommended guidelines. I might have to guess on this one.

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Janella

3 months ago

This seems like a straightforward question about GAAP guidelines for fund balances. I think I'll go with option A, the Government Finance Officers Association, since they are the professional organization that provides recommendations on this topic.

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Verdell

2 months ago

Definitely A! They know their stuff about fund balances.

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Eliseo

3 months ago

I agree, option A makes the most sense. They set the standards.

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