FAR Section

FAR Governmental Fund Accounting Practice

Conquer governmental accounting with focused practice on fund types, modified accrual rules, and the government-wide conversion process.

What You'll Practice

Our questions are aligned with the AICPA CPA Exam Blueprints, the authoritative guide for what's testable.

Five governmental fund types and their purposes
Modified accrual revenue recognition criteria
Expenditure recognition vs. expense recognition
Budgetary accounting and encumbrances
Government-wide statement preparation
Reconciliation between fund and government-wide

Common Traps to Avoid

These are the patterns that trip up candidates. Our questions specifically target these areas so you won't fall for them on exam day.

1.Confusing fund types (which is governmental vs. proprietary)
2.Misapplying the "available" criterion for revenue recognition
3.Recording capital outlay as assets instead of expenditures in funds
4.Forgetting that encumbrances aren't GAAP expenditures
5.Missing conversion adjustments for long-term items

7-Day Government Accounting Plan

Day 1
Review fund types and measurement focuses
Day 2
Practice modified accrual recognition rules
Day 3
Drill budgetary entries and encumbrances
Day 4
Practice proprietary fund accounting
Day 5
Review government-wide statements
Day 6
Practice reconciliation questions
Day 7
Comprehensive quiz + weak area review

Try 10 Free Practice Questions

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Why Our Question Bank

Questions covering all five governmental fund types
Step-by-step conversion explanations
Practice budgetary vs. GAAP accounting
Real exam-style scenario questions
Track mastery by topic area

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Frequently Asked Questions

What does "available" mean in modified accrual accounting?

Under modified accrual, revenues are recognized when measurable and available. "Available" typically means collectible within the current period or soon enough thereafter to pay current liabilities—usually 60 days after year-end, though this can vary by jurisdiction.

How do encumbrances work in governmental accounting?

Encumbrances represent commitments for future expenditures (like purchase orders). They're recorded to reserve fund balance and prevent overspending. At year-end, outstanding encumbrances may be closed or carried forward depending on the government's policy. They're not GAAP expenditures—just budgetary controls.

What's the difference between governmental and proprietary funds?

Governmental funds (General, Special Revenue, Capital Projects, Debt Service, Permanent) use modified accrual and focus on current financial resources. Proprietary funds (Enterprise, Internal Service) use full accrual like businesses and focus on economic resources. The measurement focus drives the accounting differences.

How do I approach reconciliation questions between fund and government-wide statements?

Focus on the key conversion adjustments: add capital assets and related depreciation, add long-term liabilities, convert modified accrual revenues/expenditures to full accrual, and adjust for internal service fund activities. Practice the reconciliation format the exam uses.

Related Practice Areas

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