Certified Government Financial Manager (CGFM) 2026 – 400 Free Practice Questions to Pass the Exam

The question pertains to the categorization of government spending purposes. In government financial management, expenditures are typically classified into three broad categories: current operations, debt service, and capital outlays.

Current operations involve spending necessary for the ongoing functions of government services, including salaries, maintenance of facilities, and other day-to-day operational costs. Debt service pertains to the payments made on borrowed funds, which includes both principal and interest payments.

Capital outlays refer to expenditures for the acquisition or improvement of capital assets, such as buildings, infrastructure, and equipment, and they are a key component of government investment in long-term growth.

The option labeled as "Capital Assets" does not align with the typical classifications used in government budgetary practices. While capital assets are indeed an important concept in accounting and finance, they are not themselves a spending purpose. Instead, they represent the items that are acquired through capital outlays. Thus, capital assets would generally be a result of spending categorized as capital outlays rather than a category of spending in its own right.