Financial Accounting Chapter 17 Questions And Answers
Chapter 17
Accounting and Reporting for the Federal Government
True / False Questions 1.
Responsibility for setting accounting and reporting standards for federal agencies rests primarily with the Federal Accounting Standards Advisory Board. True False 2.
By law, federal agencies must incorporate the accounting standards (GAAP) established for the federal government into their financial management systems. True False 3.
The objectives of federal financial reporting are to assist report users in evaluating budgetary integrity, operating performance, stewardship, and adequacy of systems and controls. True False 4.
Federal departments and agencies should utilize the U.S. Government Standard General Ledger as the account structure …show more content…
for their accounting systems. True False 5.
Current FASAB standards distinguish intragovernmental assets from governmental assets and entity assets from nonentity assets. True False 6.
Fund balances of a federal agency's various funds are reported in the fund equity section of the agency's balance sheet. True False 7.
Federal government accounting standards require the measurement of expenses rather than expenditures. True False 8.
Unexpended appropriations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. True False 9.
Cumulative results of operations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. True False 10.
The federal budgetary term "commitment" is synonymous with "appropriations" as used in state and local government terminology. True False 11.
The financial statements of the U.S. government are prepared using generally accepted accounting principles promulgated by the Governmental Accounting Standards Board. True False 12.
Federal government agencies prepare a management's discussion and analysis (MD&A) to be included in their general purpose federal financial report. True False 13.
Under SFFAS No. 2, all federal agencies are defined as separate reporting entities for financial statement preparation and reporting purposes. True False 14.
Objectives that are identified by SFFAS No. 1 for federal financial reporting include budgetary integrity, operating performance, transparency, and stewardship. True False 15.
Heritage assets are defined as beneficial investments of the federal government in items such as nonfederal physical property, human capital, and research and development. True False 16.
At the present time, the conceptual framework for the federal government and its agencies does not provide definitions of the basic elements of the financial statements. True False
Multiple Choice Questions 17.
Which of the following is not a part of the FASAB due process for establishing a federal financial accounting standard?
A.
Public comment on a discussion memorandum.
B.
Issuing an exposure draft.
C.
Unanimous approval by the FASAB.
D.
Support (or lack of opposition) of the standard by the three principals (Comptroller General, Secretary of the Treasury, and Director of the Office of Management and Budget).
18.
FASAB has identified four major user groups of federal financial reports, they are
A.
Congress, executives, program managers, and citizens.
B.
Congress, executives, citizens, and bond rating agencies.
C.
Congress, program managers, foreign governments, and citizens.
D.
Congress, program managers, bond rating agencies, and political parties.
19.
The "net position" of a federal agency may include all of the following components, except:
A.
Unexpended appropriations.
B.
Cumulative results of operations.
C.
Appropriations represented by undelivered orders and unobligated balances.
D.
Fund balance with U.S. Treasury.
20.
Which of the following is not an objective identified in FASAB Statement of Accounting and Reporting Concepts No. 1?
A.
To assist report users in evaluating budgetary integrity.
B.
To assist report users in evaluating the extent to which tax burdens have changed.
C.
To assist report users in evaluating stewardship.
D.
To assist report users in evaluating operating performance.
21.
Which of the following statements most accurately describes the dual-track accounting system used in federal agency accounting?
A.
Recording internal budgetary transactions and proprietary transactions with external parties on a modified accrual basis of accounting.
B.
Use of double-entry accounting.
C.
Maintaining self-balancing sets of proprietary and budgetary accounts and recording the effects of transactions on both available budgetary resources and proprietary accounts.
D.
Keeping separate books, one on a tax basis and the other on a GAAP basis.
22.
In federal government accounting, recording the estimated amount of equipment prior to actually placing an order or entering into a contract is called a(an)
A.
Obligation.
B.
Apportionment.
C.
Commitment.
D.
Allotment.
23.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is placed the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary accounts: $14,400; Proprietary accounts: $14,400.
B.
Budgetary accounts: $14,400; Proprietary accounts: $0.
C.
Budgetary accounts: $14,400; Proprietary accounts: $14,800.
D.
Budgetary accounts: $0; Proprietary accounts: $0.
24.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is received the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,400.
B.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,800.
C.
Budgetary Accounts: $400; Proprietary Accounts: $14,800.
D.
Budgetary Accounts: $0; Proprietary Accounts: $14,800.
25.
Which of the following accounts used in state and local government accounting is most like the federal budgetary account "Undelivered Orders"?
A.
Reserve for Encumbrance.
B.
Expenditures.
C.
Appropriations.
D.
Encumbrances.
26.
Which of the following financial statements is not required by OMB Circular A-136?
A.
Statement of budgetary resources.
B.
Statement of cash flows.
C.
Balance sheet.
D.
Statement of changes in net position.
27.
One of the purposes of the Federal Financial Management Improvement Act of 1996 was to
A.
Establish a requirement that the financial statements of the federal government as a whole be audited.
B.
Improve the effectiveness of programs receiving federal funds.
C.
Establish generally accepted federal accounting principles.
D.
Rebuild the credibility and restore public confidence in the federal government.
28.
Which of the following officials has shared responsibility under federal law for establishing and maintaining a sound financial structure for the federal government?
A.
Chief Financial Officer of the Congressional Budget Office.
B.
Chair of the Governmental Accounting Standards Board.
C.
Secretary of the Treasury.
D.
Chair of the Federal Accounting Standards Advisory Board.
29.
The Comptroller General of the United States is the head of the:
A.
Office of the Management and Budget.
B.
Government Accountability Office.
C.
Congressional Budget Office.
D.
Federal Accounting Standards Advisory Board.
30.
Where would federal agencies report information concerning their performance goals and performance results, along with their future challenges?
A.
Other accompanying information.
B.
Required supplemental information.
C.
Management discussion and analysis.
D.
Notes to the financial statements.
31.
Which of the following is an accurate list of the three perspectives from which the federal government can be viewed, as described in SFFAS No. 2 "Entity and Display?"
A.
Function, department, and program.
B.
Organization, budget, and program.
C.
Budget, program, and line-item.
D.
Fund, activity, and account.
32.
The management's discussion and analysis (MD&A) required in general purpose federal financial reporting is different than that required by GASB of state and local governments in that:
A.
It includes information about the agency’s performance goals and results in addition to financial activities.
B.
It is outside the general purpose federal financial report and is optional, not required.
C.
It is a part of the basic financial statements and, as a result, it is audited along with the financial statements.
D.
There are no significant differences.
33.
Which of the following federal financial statements relies primarily on the use of actuarial assumptions and long-range projections for the information reported on the statement?
A.
Balance sheet.
B.
Statement of social insurance.
C.
Statement of custodial activity.
D.
Statement of fiduciary net assets.
34.
Which of the following describes the usual flow of budgetary authority through the budgetary accounts of a federal agency?
A.
Apportionment, allotment, appropriation, commitment, obligation, expended appropriation.
B.
Allotment, commitment, obligation, expended appropriation, apportionment.
C.
Appropriation, apportionment, allotment, commitment, obligation, expended appropriation.
D.
Commitment, obligation, appropriation, apportionment, allotment, expended appropriation.
35.
Which of the following statements is not true about the United States government-wide financial report?
A.
Since 1997, the financial statements of the U.S. government as a whole have been audited by the GAO.
B.
The majority of the 24 major federal agencies required to be audited have received unqualified audit opinions by the GAO.
C.
The Comptroller General of the United States has rendered a disclaimer of opinion on the U.S. Government's consolidated financial statements for as long as that office has audited these statements.
D.
The federal government received an unqualified opinion from the GAO on the most recent financial statements of the U.S. government as a whole.
36.
Which of the following is required by OMB Circular A-136 in the basic financial statements?
A.
Statement of changes in net position.
B.
Statement of net assets.
C.
Statement of revenues, expenditures, and changes in fund balances.
D.
Statement of financing.
Short Answer Questions 37.
The following are key terms in Chapter 17 that relate to accounting and financial reporting for federal agencies and the federal government: A. Apportionment B. Budgetary resources C. Expended appropriation D. Governmental assets E. Heritage assets F. Intragovernmental assets G. Stewardship investments H. Stewardship land For each of the following definitions, indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.
Essay Questions 38.
Explain the "dual-track" accounting system used by federal agencies and why it is needed.
39.
Explain the components of net position.
40.
Explain the GAAP hierarchy used by federal government agencies.
41.
"Each federal government agency should maintain a General Fund and as many other funds defined by the GASB as are appropriate." Do you agree? Why or why not?
42.
Describe the budgetary accounts used in federal agency accounting and the flow of budgetary authority through those accounts.
43.
Identify the office, officer, or department of the United States federal government that is responsible for each of the following:
A) Appropriations.
B) Apportionments.
C) Allotments.
D) Obligations.
44.
The Federal Monuments Commission began operations on October 1, 2014. Show in general journal form all entries that should be made in budgetary and proprietary accounts of the agency to record the following events: A. The Congress passed, and the President signed, a one-year appropriation for fiscal year 2015 for the Monuments Commission in the amount of $30,000,000. B. The OMB notified the agency of the following apportionments of the 2015 appropriation: first quarter, $8,000,000; second quarter, $8,000,000; third quarter, $7,000,000; and fourth quarter, $7,000,000. C. The Commission Director allotted $1,500,000 for the operations of October 2014. D. Commitments for goods and services not yet ordered or received were recorded in the amount of $1,300,000. E. Purchase orders and contracts for services were recorded for the month of October 2014 in the amount of $1,250,000.
45.
Compute the missing amount in the following list of proprietary accounts of a federal government agency. Show all computations legibly with labels. Proprietary Accounts: Accounts Payable $ 1,200,000 Operating/Program Expenses 12,400,000 Accumulated Depreciation-Plant and Equipment 9,200,000 Cumulative Results of Operations 10/1/2013 ? Appropriations Used—2014 12,400,000 Fund Balance with Treasury—2014 4,800,000 Accounts Receivable 200,000 Operating Materials and Supplies 3,200,000 Plant and Equipment 30,000,000 Unexpended Appropriations—2014 3,600,000
46.
The Desert Conservation Agency was authorized by the United States Congress to commence operations on October 1, 2014. Record the following transactions in general journal form, as they should appear in the budgetary and proprietary accounts of the agency. For each entry indicate whether it affects the budgetary accounts or the proprietary accounts. A. The agency received official notice that its one-year appropriation passed by the Congress and signed by the President amounted to $350 million for operating expenses for the fiscal year and $100 million for acquisition of capital assets during the year. B. The Office of Management and Budget notified the agency that the entire appropriation had been apportioned. C. The head of the agency allotted $75 million for the first quarter's operating expenses, and $25 million for equipment to be ordered during the first quarter. D. Purchase orders and contracts for services recorded for the first quarter totaled $90 million (the agency does not record commitments prior to placing orders or entering into contracts). E. Total expenditures for the first quarter amounted to $70 million for operating expenses and $18 million for equipment, for which an obligation in the amount of $84 million had been previously recorded (see item D above). The expenditures were all paid from fund balance with U.S. Treasury.
47.
Explain the process of financial reporting of the U.S. Government as a whole. Does the federal government receive an unqualified audit opinion on its financial report?
48.
Describe the purpose of a management's discussion and analysis (MD&A) in the general purpose federal financial report of a federal agency.
49.
What is the difference between entity assets and nonentity assets?
50.
Describe accounting for federal social insurance programs. Comment on the adequacy of current accounting standards in this area.
51.
What is a Performance and Accountability Report (PAR)? Describe its purpose and contents.
Chapter 17 Accounting and Reporting for the Federal Government Answer Key
True / False Questions 1.
Responsibility for setting accounting and reporting standards for federal agencies rests primarily with the Federal Accounting Standards Advisory Board. FALSE
Responsibility for setting accounting and reporting standards and for establishing and maintaining a sound financial management system for the federal government as a whole is vested in the three sponsors or "principals" of the FASAB: the Comptroller General, the Director of the Office of Management and Budget, and Secretary of the Treasury. While in most cases the recommendations of the FASAB are expected to be accepted by the foregoing three "principals," the recommendations are just that—recommendations. Difficulty: Easy
Question Type: Concept
2.
By law, federal agencies must incorporate the accounting standards (GAAP) established for the federal government into their financial management systems. TRUE
The Federal Financial Management Improvement Act of 1996 (law) requires agencies to use accounting standards established for the federal government. Difficulty: Easy
Question Type: Concept
3.
The objectives of federal financial reporting are to assist report users in evaluating budgetary integrity, operating performance, stewardship, and adequacy of systems and controls. TRUE
These are the objectives identified in FASAB Statement of Accounting and Reporting Concepts No. 1, as discussed in Chapter 17. Difficulty: Easy
Question Type: Concept
4.
Federal departments and agencies should utilize the U.S. Government Standard General Ledger as the account structure for their accounting systems. TRUE
Some federal departments and agencies were slow to adopt the Standard General Ledger; however, now it is expected to be in use by all agencies in order to ensure uniformity and standardization of financial information reported to central agencies of the U.S. Treasury Department. Difficulty: Easy
Question Type: Concept
5.
Current FASAB standards distinguish intragovernmental assets from governmental assets and entity assets from nonentity assets. FALSE
Entity assets are combined with nonentity assets, although that was not the case in the past. Statement of Federal Financial Accounting Standards (SFFAS) No. 1 addresses these issues. Difficulty: Medium
Question Type: Concept
6.
Fund balances of a federal agency's various funds are reported in the fund equity section of the agency's balance sheet. FALSE
The fund balances (net assets) of the various funds are reported in the net position section of an agency's balance sheet. Difficulty: Medium
Question Type: Concept
7.
Federal government accounting standards require the measurement of expenses rather than expenditures. FALSE
While it is true that accounting standards for federal accounting require the measurement of expenses for assessing the cost of programs and activities, they also require the measurement of expenditures (although called expended appropriations) that are compared to appropriations for budgetary accounting purposes. Difficulty: Medium
Question Type: Concept
8.
Unexpended appropriations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. TRUE
OMB Circular A-136 requires that the components of net position be (1) unexpended appropriations, the amount of the entity's appropriations represented by undelivered orders and unobligated balances, and (2) cumulative results of operations. Difficulty: Medium
Question Type: Concept
9.
Cumulative results of operations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. FALSE
OMB Circular A-136 requires that the components of net position be (1) unexpended appropriations, and (2) cumulative results of operations, the net difference between expenses/losses and financing sources, including appropriations, revenues, and gains, since the inception of the activity. Cumulative results of operations also includes any other items that would affect the net position, including, the fair value of donated assets and assets (net of liabilities) transferred to or from other federal entities without reimbursement. Difficulty: Medium
Question Type: Concept
10.
The federal budgetary term "commitment" is synonymous with "appropriations" as used in state and local government terminology. FALSE
The federal budgetary term "commitment" means to reserve allotted budgetary authority in the amount of an order prior to the actual ordering of goods and services, whereas "appropriations" in state and local government usage means authorization granted by a legislative body to incur liabilities for approved purposes. The additional "commitment" step is optional though recommended for federal agencies. Difficulty: Medium
Question Type: Concept
11.
The financial statements of the U.S. government are prepared using generally accepted accounting principles promulgated by the Governmental Accounting Standards Board. FALSE
Federal GAAP is promulgated by the Federal Accounting Standards Advisory Board. Difficulty: Easy
Question Type: Concept
12.
Federal government agencies prepare a management's discussion and analysis (MD&A) to be included in their general purpose federal financial report. TRUE
Statement of Federal Financial Accounting Concepts No. 3 requires an MD&A for federal agencies to be in compliance with federal GAAP. Difficulty: Medium
Question Type: Concept
13.
Under SFFAS No. 2, all federal agencies are defined as separate reporting entities for financial statement preparation and reporting purposes. FALSE
SFFAS No. 2 "Entity and Display" describe the three specific criteria that must be met before a federal agency can be considered a reporting entity. Difficulty: Medium
Question Type: Concept
14.
Objectives that are identified by SFFAS No. 1 for federal financial reporting include budgetary integrity, operating performance, transparency, and stewardship. FALSE
SFFAS No. 1 includes budgetary integrity, operating performance, and stewardship, but not transparency. Difficulty: Medium
Question Type: Concept
15.
Heritage assets are defined as beneficial investments of the federal government in items such as nonfederal physical property, human capital, and research and development. FALSE
The definition provided is for stewardship investments not heritage assets. Difficulty: Medium
Question Type: Concept
16.
At the present time, the conceptual framework for the federal government and its agencies does not provide definitions of the basic elements of the financial statements. FALSE
Statement of Federal Financial Accounting Concepts No. 5 "Definitions of Elements and Basic Recognition Criteria for Accrual-Basis Financial Statements" defines assets, liabilities, net position, revenues, and expenses, as well as establishes that in order to be recognized on the face of a financial statement, an item must meet the definition of an element and be measurable. Difficulty: Easy
Question Type: Concept
Multiple Choice Questions 17.
Which of the following is not a part of the FASAB due process for establishing a federal financial accounting standard?
A.
Public comment on a discussion memorandum.
B.
Issuing an exposure draft.
C.
Unanimous approval by the FASAB.
D.
Support (or lack of opposition) of the standard by the three principals (Comptroller General, Secretary of the Treasury, and Director of the Office of Management and Budget).
Difficulty: Medium
Question Type: Concept
18.
FASAB has identified four major user groups of federal financial reports, they are
A.
Congress, executives, program managers, and citizens.
B.
Congress, executives, citizens, and bond rating agencies.
C.
Congress, program managers, foreign governments, and citizens.
D.
Congress, program managers, bond rating agencies, and political parties.
Difficulty: Medium
Question Type: Concept
19.
The "net position" of a federal agency may include all of the following components, except:
A.
Unexpended appropriations.
B.
Cumulative results of operations.
C.
Appropriations represented by undelivered orders and unobligated balances.
D.
Fund balance with U.S. Treasury.
Difficulty: Easy
Question Type: Concept
20.
Which of the following is not an objective identified in FASAB Statement of Accounting and Reporting Concepts No. 1?
A.
To assist report users in evaluating budgetary integrity.
B.
To assist report users in evaluating the extent to which tax burdens have changed.
C.
To assist report users in evaluating stewardship.
D.
To assist report users in evaluating operating performance.
Difficulty: Medium
Question Type: Concept
21.
Which of the following statements most accurately describes the dual-track accounting system used in federal agency accounting?
A.
Recording internal budgetary transactions and proprietary transactions with external parties on a modified accrual basis of accounting.
B.
Use of double-entry accounting.
C.
Maintaining self-balancing sets of proprietary and budgetary accounts and recording the effects of transactions on both available budgetary resources and proprietary accounts.
D.
Keeping separate books, one on a tax basis and the other on a GAAP basis.
Difficulty: Medium
Question Type: Concept
22.
In federal government accounting, recording the estimated amount of equipment prior to actually placing an order or entering into a contract is called a(an)
A.
Obligation.
B.
Apportionment.
C.
Commitment.
D.
Allotment.
Difficulty: Medium
Question Type: Concept
23.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is placed the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary accounts: $14,400; Proprietary accounts: $14,400.
B.
Budgetary accounts: $14,400; Proprietary accounts: $0.
C.
Budgetary accounts: $14,400; Proprietary accounts: $14,800.
D.
Budgetary accounts: $0; Proprietary accounts: $0.
Difficulty: Medium
Question Type: Calculation
24.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is received the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,400.
B.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,800.
C.
Budgetary Accounts: $400; Proprietary Accounts: $14,800.
D.
Budgetary Accounts: $0; Proprietary Accounts: $14,800.
Difficulty: Medium
Question Type: Journal Entry
25.
Which of the following accounts used in state and local government accounting is most like the federal budgetary account "Undelivered Orders"?
A.
Reserve for Encumbrance.
B.
Expenditures.
C.
Appropriations.
D.
Encumbrances.
Difficulty: Medium
Question Type: Concept
26.
Which of the following financial statements is not required by OMB Circular A-136?
A.
Statement of budgetary resources.
B.
Statement of cash flows.
C.
Balance sheet.
D.
Statement of changes in net position.
Difficulty: Medium
Question Type: Concept
27.
One of the purposes of the Federal Financial Management Improvement Act of 1996 was to
A.
Establish a requirement that the financial statements of the federal government as a whole be audited.
B.
Improve the effectiveness of programs receiving federal funds.
C.
Establish generally accepted federal accounting principles.
D.
Rebuild the credibility and restore public confidence in the federal government.
Difficulty: Medium
Question Type: Concept
28.
Which of the following officials has shared responsibility under federal law for establishing and maintaining a sound financial structure for the federal government?
A.
Chief Financial Officer of the Congressional Budget Office.
B.
Chair of the Governmental Accounting Standards Board.
C.
Secretary of the Treasury.
D.
Chair of the Federal Accounting Standards Advisory Board.
Difficulty: Medium
Question Type: Concept
29.
The Comptroller General of the United States is the head of the:
A.
Office of the Management and Budget.
B.
Government Accountability Office.
C.
Congressional Budget Office.
D.
Federal Accounting Standards Advisory Board.
Difficulty: Easy
Question Type: Concept
30.
Where would federal agencies report information concerning their performance goals and performance results, along with their future challenges?
A.
Other accompanying information.
B.
Required supplemental information.
C.
Management discussion and analysis.
D.
Notes to the financial statements.
Difficulty: Medium
Question Type: Concept
31.
Which of the following is an accurate list of the three perspectives from which the federal government can be viewed, as described in SFFAS No. 2 "Entity and Display?"
A.
Function, department, and program.
B.
Organization, budget, and program.
C.
Budget, program, and line-item.
D.
Fund, activity, and account.
Difficulty: Medium
Question Type: Concept
32.
The management's discussion and analysis (MD&A) required in general purpose federal financial reporting is different than that required by GASB of state and local governments in that:
A.
It includes information about the agency’s performance goals and results in addition to financial activities.
B.
It is outside the general purpose federal financial report and is optional, not required.
C.
It is a part of the basic financial statements and, as a result, it is audited along with the financial statements.
D.
There are no significant differences.
Difficulty: Medium
Question Type: Concept
33.
Which of the following federal financial statements relies primarily on the use of actuarial assumptions and long-range projections for the information reported on the statement?
A.
Balance sheet.
B.
Statement of social insurance.
C.
Statement of custodial activity.
D.
Statement of fiduciary net assets.
Difficulty: Medium
Question Type: Concept
34.
Which of the following describes the usual flow of budgetary authority through the budgetary accounts of a federal agency?
A.
Apportionment, allotment, appropriation, commitment, obligation, expended appropriation.
B.
Allotment, commitment, obligation, expended appropriation, apportionment.
C.
Appropriation, apportionment, allotment, commitment, obligation, expended appropriation.
D.
Commitment, obligation, appropriation, apportionment, allotment, expended appropriation.
Difficulty: Medium
Question Type: Concept
35.
Which of the following statements is not true about the United States government-wide financial report?
A.
Since 1997, the financial statements of the U.S. government as a whole have been audited by the GAO.
B.
The majority of the 24 major federal agencies required to be audited have received unqualified audit opinions by the GAO.
C.
The Comptroller General of the United States has rendered a disclaimer of opinion on the U.S. Government's consolidated financial statements for as long as that office has audited these statements.
D.
The federal government received an unqualified opinion from the GAO on the most recent financial statements of the U.S. government as a whole.
Difficulty: Medium
Question Type: Concept
36.
Which of the following is required by OMB Circular A-136 in the basic financial statements?
A.
Statement of changes in net position.
B.
Statement of net assets.
C.
Statement of revenues, expenditures, and changes in fund balances.
D.
Statement of financing.
Difficulty: Medium
Question Type: Concept
Short Answer Questions 37.
The following are key terms in Chapter 17 that relate to accounting and financial reporting for federal agencies and the federal government: A. Apportionment B. Budgetary resources C. Expended appropriation D. Governmental assets E. Heritage assets F. Intragovernmental assets G. Stewardship investments H. Stewardship land For each of the following definitions, indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.
Difficulty: Medium
Question Type: Concept
Essay Questions 38.
Explain the "dual-track" accounting system used by federal agencies and why it is needed.
Difficulty: Medium
Question Type: Concept
39.
Explain the components of net position.
Difficulty: Medium
Question Type: Concept
40.
Explain the GAAP hierarchy used by federal government agencies.
Difficulty: Medium
Question Type: Concept
41.
"Each federal government agency should maintain a General Fund and as many other funds defined by the GASB as are appropriate." Do you agree? Why or why not?
Difficulty: Medium
Question Type: Concept
42.
Describe the budgetary accounts used in federal agency accounting and the flow of budgetary authority through those accounts.
Difficulty: Medium
Question Type: Concept
43.
Identify the office, officer, or department of the United States federal government that is responsible for each of the following:
A) Appropriations.
B) Apportionments.
C) Allotments.
D) Obligations.
Difficulty: Medium
Question Type: Concept
44.
The Federal Monuments Commission began operations on October 1, 2014. Show in general journal form all entries that should be made in budgetary and proprietary accounts of the agency to record the following events: A. The Congress passed, and the President signed, a one-year appropriation for fiscal year 2015 for the Monuments Commission in the amount of $30,000,000. B. The OMB notified the agency of the following apportionments of the 2015 appropriation: first quarter, $8,000,000; second quarter, $8,000,000; third quarter, $7,000,000; and fourth quarter, $7,000,000. C. The Commission Director allotted $1,500,000 for the operations of October 2014. D. Commitments for goods and services not yet ordered or received were recorded in the amount of $1,300,000. E. Purchase orders and contracts for services were recorded for the month of October 2014 in the amount of $1,250,000.
Difficulty: Medium
Question Type: Journal Entry
45.
Compute the missing amount in the following list of proprietary accounts of a federal government agency. Show all computations legibly with labels. Proprietary Accounts: Accounts Payable $ 1,200,000 Operating/Program Expenses 12,400,000 Accumulated Depreciation-Plant and Equipment 9,200,000 Cumulative Results of Operations 10/1/2013 ? Appropriations Used—2014 12,400,000 Fund Balance with Treasury—2014 4,800,000 Accounts Receivable 200,000 Operating Materials and Supplies 3,200,000 Plant and Equipment 30,000,000 Unexpended Appropriations—2014 3,600,000
Difficulty: Medium
Question Type: Calculation
46.
The Desert Conservation Agency was authorized by the United States Congress to commence operations on October 1, 2014. Record the following transactions in general journal form, as they should appear in the budgetary and proprietary accounts of the agency. For each entry indicate whether it affects the budgetary accounts or the proprietary accounts. A. The agency received official notice that its one-year appropriation passed by the Congress and signed by the President amounted to $350 million for operating expenses for the fiscal year and $100 million for acquisition of capital assets during the year. B. The Office of Management and Budget notified the agency that the entire appropriation had been apportioned. C. The head of the agency allotted $75 million for the first quarter's operating expenses, and $25 million for equipment to be ordered during the first quarter. D. Purchase orders and contracts for services recorded for the first quarter totaled $90 million (the agency does not record commitments prior to placing orders or entering into contracts). E. Total expenditures for the first quarter amounted to $70 million for operating expenses and $18 million for equipment, for which an obligation in the amount of $84 million had been previously recorded (see item D above). The expenditures were all paid from fund balance with U.S. Treasury.
Difficulty: Medium
Question Type: Journal Entry
47.
Explain the process of financial reporting of the U.S. Government as a whole. Does the federal government receive an unqualified audit opinion on its financial report?
Difficulty: Medium
Question Type: Concept
48.
Describe the purpose of a management's discussion and analysis (MD&A) in the general purpose federal financial report of a federal agency.
Difficulty: Medium
Question Type: Concept
49.
What is the difference between entity assets and nonentity assets?
Difficulty: Medium
Question Type: Concept
50.
Describe accounting for federal social insurance programs. Comment on the adequacy of current accounting standards in this area.
Difficulty: Medium
Question Type: Analysis
51.
What is a Performance and Accountability Report (PAR)? Describe its purpose and contents.
Difficulty: Medium
Question Type: Concept
Accounting and Reporting for the Federal Government
True / False Questions 1.
Responsibility for setting accounting and reporting standards for federal agencies rests primarily with the Federal Accounting Standards Advisory Board. True False 2.
By law, federal agencies must incorporate the accounting standards (GAAP) established for the federal government into their financial management systems. True False 3.
The objectives of federal financial reporting are to assist report users in evaluating budgetary integrity, operating performance, stewardship, and adequacy of systems and controls. True False 4.
Federal departments and agencies should utilize the U.S. Government Standard General Ledger as the account structure …show more content…
for their accounting systems. True False 5.
Current FASAB standards distinguish intragovernmental assets from governmental assets and entity assets from nonentity assets. True False 6.
Fund balances of a federal agency's various funds are reported in the fund equity section of the agency's balance sheet. True False 7.
Federal government accounting standards require the measurement of expenses rather than expenditures. True False 8.
Unexpended appropriations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. True False 9.
Cumulative results of operations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. True False 10.
The federal budgetary term "commitment" is synonymous with "appropriations" as used in state and local government terminology. True False 11.
The financial statements of the U.S. government are prepared using generally accepted accounting principles promulgated by the Governmental Accounting Standards Board. True False 12.
Federal government agencies prepare a management's discussion and analysis (MD&A) to be included in their general purpose federal financial report. True False 13.
Under SFFAS No. 2, all federal agencies are defined as separate reporting entities for financial statement preparation and reporting purposes. True False 14.
Objectives that are identified by SFFAS No. 1 for federal financial reporting include budgetary integrity, operating performance, transparency, and stewardship. True False 15.
Heritage assets are defined as beneficial investments of the federal government in items such as nonfederal physical property, human capital, and research and development. True False 16.
At the present time, the conceptual framework for the federal government and its agencies does not provide definitions of the basic elements of the financial statements. True False
Multiple Choice Questions 17.
Which of the following is not a part of the FASAB due process for establishing a federal financial accounting standard?
A.
Public comment on a discussion memorandum.
B.
Issuing an exposure draft.
C.
Unanimous approval by the FASAB.
D.
Support (or lack of opposition) of the standard by the three principals (Comptroller General, Secretary of the Treasury, and Director of the Office of Management and Budget).
18.
FASAB has identified four major user groups of federal financial reports, they are
A.
Congress, executives, program managers, and citizens.
B.
Congress, executives, citizens, and bond rating agencies.
C.
Congress, program managers, foreign governments, and citizens.
D.
Congress, program managers, bond rating agencies, and political parties.
19.
The "net position" of a federal agency may include all of the following components, except:
A.
Unexpended appropriations.
B.
Cumulative results of operations.
C.
Appropriations represented by undelivered orders and unobligated balances.
D.
Fund balance with U.S. Treasury.
20.
Which of the following is not an objective identified in FASAB Statement of Accounting and Reporting Concepts No. 1?
A.
To assist report users in evaluating budgetary integrity.
B.
To assist report users in evaluating the extent to which tax burdens have changed.
C.
To assist report users in evaluating stewardship.
D.
To assist report users in evaluating operating performance.
21.
Which of the following statements most accurately describes the dual-track accounting system used in federal agency accounting?
A.
Recording internal budgetary transactions and proprietary transactions with external parties on a modified accrual basis of accounting.
B.
Use of double-entry accounting.
C.
Maintaining self-balancing sets of proprietary and budgetary accounts and recording the effects of transactions on both available budgetary resources and proprietary accounts.
D.
Keeping separate books, one on a tax basis and the other on a GAAP basis.
22.
In federal government accounting, recording the estimated amount of equipment prior to actually placing an order or entering into a contract is called a(an)
A.
Obligation.
B.
Apportionment.
C.
Commitment.
D.
Allotment.
23.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is placed the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary accounts: $14,400; Proprietary accounts: $14,400.
B.
Budgetary accounts: $14,400; Proprietary accounts: $0.
C.
Budgetary accounts: $14,400; Proprietary accounts: $14,800.
D.
Budgetary accounts: $0; Proprietary accounts: $0.
24.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is received the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,400.
B.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,800.
C.
Budgetary Accounts: $400; Proprietary Accounts: $14,800.
D.
Budgetary Accounts: $0; Proprietary Accounts: $14,800.
25.
Which of the following accounts used in state and local government accounting is most like the federal budgetary account "Undelivered Orders"?
A.
Reserve for Encumbrance.
B.
Expenditures.
C.
Appropriations.
D.
Encumbrances.
26.
Which of the following financial statements is not required by OMB Circular A-136?
A.
Statement of budgetary resources.
B.
Statement of cash flows.
C.
Balance sheet.
D.
Statement of changes in net position.
27.
One of the purposes of the Federal Financial Management Improvement Act of 1996 was to
A.
Establish a requirement that the financial statements of the federal government as a whole be audited.
B.
Improve the effectiveness of programs receiving federal funds.
C.
Establish generally accepted federal accounting principles.
D.
Rebuild the credibility and restore public confidence in the federal government.
28.
Which of the following officials has shared responsibility under federal law for establishing and maintaining a sound financial structure for the federal government?
A.
Chief Financial Officer of the Congressional Budget Office.
B.
Chair of the Governmental Accounting Standards Board.
C.
Secretary of the Treasury.
D.
Chair of the Federal Accounting Standards Advisory Board.
29.
The Comptroller General of the United States is the head of the:
A.
Office of the Management and Budget.
B.
Government Accountability Office.
C.
Congressional Budget Office.
D.
Federal Accounting Standards Advisory Board.
30.
Where would federal agencies report information concerning their performance goals and performance results, along with their future challenges?
A.
Other accompanying information.
B.
Required supplemental information.
C.
Management discussion and analysis.
D.
Notes to the financial statements.
31.
Which of the following is an accurate list of the three perspectives from which the federal government can be viewed, as described in SFFAS No. 2 "Entity and Display?"
A.
Function, department, and program.
B.
Organization, budget, and program.
C.
Budget, program, and line-item.
D.
Fund, activity, and account.
32.
The management's discussion and analysis (MD&A) required in general purpose federal financial reporting is different than that required by GASB of state and local governments in that:
A.
It includes information about the agency’s performance goals and results in addition to financial activities.
B.
It is outside the general purpose federal financial report and is optional, not required.
C.
It is a part of the basic financial statements and, as a result, it is audited along with the financial statements.
D.
There are no significant differences.
33.
Which of the following federal financial statements relies primarily on the use of actuarial assumptions and long-range projections for the information reported on the statement?
A.
Balance sheet.
B.
Statement of social insurance.
C.
Statement of custodial activity.
D.
Statement of fiduciary net assets.
34.
Which of the following describes the usual flow of budgetary authority through the budgetary accounts of a federal agency?
A.
Apportionment, allotment, appropriation, commitment, obligation, expended appropriation.
B.
Allotment, commitment, obligation, expended appropriation, apportionment.
C.
Appropriation, apportionment, allotment, commitment, obligation, expended appropriation.
D.
Commitment, obligation, appropriation, apportionment, allotment, expended appropriation.
35.
Which of the following statements is not true about the United States government-wide financial report?
A.
Since 1997, the financial statements of the U.S. government as a whole have been audited by the GAO.
B.
The majority of the 24 major federal agencies required to be audited have received unqualified audit opinions by the GAO.
C.
The Comptroller General of the United States has rendered a disclaimer of opinion on the U.S. Government's consolidated financial statements for as long as that office has audited these statements.
D.
The federal government received an unqualified opinion from the GAO on the most recent financial statements of the U.S. government as a whole.
36.
Which of the following is required by OMB Circular A-136 in the basic financial statements?
A.
Statement of changes in net position.
B.
Statement of net assets.
C.
Statement of revenues, expenditures, and changes in fund balances.
D.
Statement of financing.
Short Answer Questions 37.
The following are key terms in Chapter 17 that relate to accounting and financial reporting for federal agencies and the federal government: A. Apportionment B. Budgetary resources C. Expended appropriation D. Governmental assets E. Heritage assets F. Intragovernmental assets G. Stewardship investments H. Stewardship land For each of the following definitions, indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.
Essay Questions 38.
Explain the "dual-track" accounting system used by federal agencies and why it is needed.
39.
Explain the components of net position.
40.
Explain the GAAP hierarchy used by federal government agencies.
41.
"Each federal government agency should maintain a General Fund and as many other funds defined by the GASB as are appropriate." Do you agree? Why or why not?
42.
Describe the budgetary accounts used in federal agency accounting and the flow of budgetary authority through those accounts.
43.
Identify the office, officer, or department of the United States federal government that is responsible for each of the following:
A) Appropriations.
B) Apportionments.
C) Allotments.
D) Obligations.
44.
The Federal Monuments Commission began operations on October 1, 2014. Show in general journal form all entries that should be made in budgetary and proprietary accounts of the agency to record the following events: A. The Congress passed, and the President signed, a one-year appropriation for fiscal year 2015 for the Monuments Commission in the amount of $30,000,000. B. The OMB notified the agency of the following apportionments of the 2015 appropriation: first quarter, $8,000,000; second quarter, $8,000,000; third quarter, $7,000,000; and fourth quarter, $7,000,000. C. The Commission Director allotted $1,500,000 for the operations of October 2014. D. Commitments for goods and services not yet ordered or received were recorded in the amount of $1,300,000. E. Purchase orders and contracts for services were recorded for the month of October 2014 in the amount of $1,250,000.
45.
Compute the missing amount in the following list of proprietary accounts of a federal government agency. Show all computations legibly with labels. Proprietary Accounts: Accounts Payable $ 1,200,000 Operating/Program Expenses 12,400,000 Accumulated Depreciation-Plant and Equipment 9,200,000 Cumulative Results of Operations 10/1/2013 ? Appropriations Used—2014 12,400,000 Fund Balance with Treasury—2014 4,800,000 Accounts Receivable 200,000 Operating Materials and Supplies 3,200,000 Plant and Equipment 30,000,000 Unexpended Appropriations—2014 3,600,000
46.
The Desert Conservation Agency was authorized by the United States Congress to commence operations on October 1, 2014. Record the following transactions in general journal form, as they should appear in the budgetary and proprietary accounts of the agency. For each entry indicate whether it affects the budgetary accounts or the proprietary accounts. A. The agency received official notice that its one-year appropriation passed by the Congress and signed by the President amounted to $350 million for operating expenses for the fiscal year and $100 million for acquisition of capital assets during the year. B. The Office of Management and Budget notified the agency that the entire appropriation had been apportioned. C. The head of the agency allotted $75 million for the first quarter's operating expenses, and $25 million for equipment to be ordered during the first quarter. D. Purchase orders and contracts for services recorded for the first quarter totaled $90 million (the agency does not record commitments prior to placing orders or entering into contracts). E. Total expenditures for the first quarter amounted to $70 million for operating expenses and $18 million for equipment, for which an obligation in the amount of $84 million had been previously recorded (see item D above). The expenditures were all paid from fund balance with U.S. Treasury.
47.
Explain the process of financial reporting of the U.S. Government as a whole. Does the federal government receive an unqualified audit opinion on its financial report?
48.
Describe the purpose of a management's discussion and analysis (MD&A) in the general purpose federal financial report of a federal agency.
49.
What is the difference between entity assets and nonentity assets?
50.
Describe accounting for federal social insurance programs. Comment on the adequacy of current accounting standards in this area.
51.
What is a Performance and Accountability Report (PAR)? Describe its purpose and contents.
Chapter 17 Accounting and Reporting for the Federal Government Answer Key
True / False Questions 1.
Responsibility for setting accounting and reporting standards for federal agencies rests primarily with the Federal Accounting Standards Advisory Board. FALSE
Responsibility for setting accounting and reporting standards and for establishing and maintaining a sound financial management system for the federal government as a whole is vested in the three sponsors or "principals" of the FASAB: the Comptroller General, the Director of the Office of Management and Budget, and Secretary of the Treasury. While in most cases the recommendations of the FASAB are expected to be accepted by the foregoing three "principals," the recommendations are just that—recommendations. Difficulty: Easy
Question Type: Concept
2.
By law, federal agencies must incorporate the accounting standards (GAAP) established for the federal government into their financial management systems. TRUE
The Federal Financial Management Improvement Act of 1996 (law) requires agencies to use accounting standards established for the federal government. Difficulty: Easy
Question Type: Concept
3.
The objectives of federal financial reporting are to assist report users in evaluating budgetary integrity, operating performance, stewardship, and adequacy of systems and controls. TRUE
These are the objectives identified in FASAB Statement of Accounting and Reporting Concepts No. 1, as discussed in Chapter 17. Difficulty: Easy
Question Type: Concept
4.
Federal departments and agencies should utilize the U.S. Government Standard General Ledger as the account structure for their accounting systems. TRUE
Some federal departments and agencies were slow to adopt the Standard General Ledger; however, now it is expected to be in use by all agencies in order to ensure uniformity and standardization of financial information reported to central agencies of the U.S. Treasury Department. Difficulty: Easy
Question Type: Concept
5.
Current FASAB standards distinguish intragovernmental assets from governmental assets and entity assets from nonentity assets. FALSE
Entity assets are combined with nonentity assets, although that was not the case in the past. Statement of Federal Financial Accounting Standards (SFFAS) No. 1 addresses these issues. Difficulty: Medium
Question Type: Concept
6.
Fund balances of a federal agency's various funds are reported in the fund equity section of the agency's balance sheet. FALSE
The fund balances (net assets) of the various funds are reported in the net position section of an agency's balance sheet. Difficulty: Medium
Question Type: Concept
7.
Federal government accounting standards require the measurement of expenses rather than expenditures. FALSE
While it is true that accounting standards for federal accounting require the measurement of expenses for assessing the cost of programs and activities, they also require the measurement of expenditures (although called expended appropriations) that are compared to appropriations for budgetary accounting purposes. Difficulty: Medium
Question Type: Concept
8.
Unexpended appropriations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. TRUE
OMB Circular A-136 requires that the components of net position be (1) unexpended appropriations, the amount of the entity's appropriations represented by undelivered orders and unobligated balances, and (2) cumulative results of operations. Difficulty: Medium
Question Type: Concept
9.
Cumulative results of operations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation, or which has been obligated but not yet expended. FALSE
OMB Circular A-136 requires that the components of net position be (1) unexpended appropriations, and (2) cumulative results of operations, the net difference between expenses/losses and financing sources, including appropriations, revenues, and gains, since the inception of the activity. Cumulative results of operations also includes any other items that would affect the net position, including, the fair value of donated assets and assets (net of liabilities) transferred to or from other federal entities without reimbursement. Difficulty: Medium
Question Type: Concept
10.
The federal budgetary term "commitment" is synonymous with "appropriations" as used in state and local government terminology. FALSE
The federal budgetary term "commitment" means to reserve allotted budgetary authority in the amount of an order prior to the actual ordering of goods and services, whereas "appropriations" in state and local government usage means authorization granted by a legislative body to incur liabilities for approved purposes. The additional "commitment" step is optional though recommended for federal agencies. Difficulty: Medium
Question Type: Concept
11.
The financial statements of the U.S. government are prepared using generally accepted accounting principles promulgated by the Governmental Accounting Standards Board. FALSE
Federal GAAP is promulgated by the Federal Accounting Standards Advisory Board. Difficulty: Easy
Question Type: Concept
12.
Federal government agencies prepare a management's discussion and analysis (MD&A) to be included in their general purpose federal financial report. TRUE
Statement of Federal Financial Accounting Concepts No. 3 requires an MD&A for federal agencies to be in compliance with federal GAAP. Difficulty: Medium
Question Type: Concept
13.
Under SFFAS No. 2, all federal agencies are defined as separate reporting entities for financial statement preparation and reporting purposes. FALSE
SFFAS No. 2 "Entity and Display" describe the three specific criteria that must be met before a federal agency can be considered a reporting entity. Difficulty: Medium
Question Type: Concept
14.
Objectives that are identified by SFFAS No. 1 for federal financial reporting include budgetary integrity, operating performance, transparency, and stewardship. FALSE
SFFAS No. 1 includes budgetary integrity, operating performance, and stewardship, but not transparency. Difficulty: Medium
Question Type: Concept
15.
Heritage assets are defined as beneficial investments of the federal government in items such as nonfederal physical property, human capital, and research and development. FALSE
The definition provided is for stewardship investments not heritage assets. Difficulty: Medium
Question Type: Concept
16.
At the present time, the conceptual framework for the federal government and its agencies does not provide definitions of the basic elements of the financial statements. FALSE
Statement of Federal Financial Accounting Concepts No. 5 "Definitions of Elements and Basic Recognition Criteria for Accrual-Basis Financial Statements" defines assets, liabilities, net position, revenues, and expenses, as well as establishes that in order to be recognized on the face of a financial statement, an item must meet the definition of an element and be measurable. Difficulty: Easy
Question Type: Concept
Multiple Choice Questions 17.
Which of the following is not a part of the FASAB due process for establishing a federal financial accounting standard?
A.
Public comment on a discussion memorandum.
B.
Issuing an exposure draft.
C.
Unanimous approval by the FASAB.
D.
Support (or lack of opposition) of the standard by the three principals (Comptroller General, Secretary of the Treasury, and Director of the Office of Management and Budget).
Difficulty: Medium
Question Type: Concept
18.
FASAB has identified four major user groups of federal financial reports, they are
A.
Congress, executives, program managers, and citizens.
B.
Congress, executives, citizens, and bond rating agencies.
C.
Congress, program managers, foreign governments, and citizens.
D.
Congress, program managers, bond rating agencies, and political parties.
Difficulty: Medium
Question Type: Concept
19.
The "net position" of a federal agency may include all of the following components, except:
A.
Unexpended appropriations.
B.
Cumulative results of operations.
C.
Appropriations represented by undelivered orders and unobligated balances.
D.
Fund balance with U.S. Treasury.
Difficulty: Easy
Question Type: Concept
20.
Which of the following is not an objective identified in FASAB Statement of Accounting and Reporting Concepts No. 1?
A.
To assist report users in evaluating budgetary integrity.
B.
To assist report users in evaluating the extent to which tax burdens have changed.
C.
To assist report users in evaluating stewardship.
D.
To assist report users in evaluating operating performance.
Difficulty: Medium
Question Type: Concept
21.
Which of the following statements most accurately describes the dual-track accounting system used in federal agency accounting?
A.
Recording internal budgetary transactions and proprietary transactions with external parties on a modified accrual basis of accounting.
B.
Use of double-entry accounting.
C.
Maintaining self-balancing sets of proprietary and budgetary accounts and recording the effects of transactions on both available budgetary resources and proprietary accounts.
D.
Keeping separate books, one on a tax basis and the other on a GAAP basis.
Difficulty: Medium
Question Type: Concept
22.
In federal government accounting, recording the estimated amount of equipment prior to actually placing an order or entering into a contract is called a(an)
A.
Obligation.
B.
Apportionment.
C.
Commitment.
D.
Allotment.
Difficulty: Medium
Question Type: Concept
23.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is placed the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary accounts: $14,400; Proprietary accounts: $14,400.
B.
Budgetary accounts: $14,400; Proprietary accounts: $0.
C.
Budgetary accounts: $14,400; Proprietary accounts: $14,800.
D.
Budgetary accounts: $0; Proprietary accounts: $0.
Difficulty: Medium
Question Type: Calculation
24.
A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. When the order is received the required journal entry (or entries) will affect the accounts shown in what net amounts?
A.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,400.
B.
Budgetary Accounts: $14,400; Proprietary Accounts: $14,800.
C.
Budgetary Accounts: $400; Proprietary Accounts: $14,800.
D.
Budgetary Accounts: $0; Proprietary Accounts: $14,800.
Difficulty: Medium
Question Type: Journal Entry
25.
Which of the following accounts used in state and local government accounting is most like the federal budgetary account "Undelivered Orders"?
A.
Reserve for Encumbrance.
B.
Expenditures.
C.
Appropriations.
D.
Encumbrances.
Difficulty: Medium
Question Type: Concept
26.
Which of the following financial statements is not required by OMB Circular A-136?
A.
Statement of budgetary resources.
B.
Statement of cash flows.
C.
Balance sheet.
D.
Statement of changes in net position.
Difficulty: Medium
Question Type: Concept
27.
One of the purposes of the Federal Financial Management Improvement Act of 1996 was to
A.
Establish a requirement that the financial statements of the federal government as a whole be audited.
B.
Improve the effectiveness of programs receiving federal funds.
C.
Establish generally accepted federal accounting principles.
D.
Rebuild the credibility and restore public confidence in the federal government.
Difficulty: Medium
Question Type: Concept
28.
Which of the following officials has shared responsibility under federal law for establishing and maintaining a sound financial structure for the federal government?
A.
Chief Financial Officer of the Congressional Budget Office.
B.
Chair of the Governmental Accounting Standards Board.
C.
Secretary of the Treasury.
D.
Chair of the Federal Accounting Standards Advisory Board.
Difficulty: Medium
Question Type: Concept
29.
The Comptroller General of the United States is the head of the:
A.
Office of the Management and Budget.
B.
Government Accountability Office.
C.
Congressional Budget Office.
D.
Federal Accounting Standards Advisory Board.
Difficulty: Easy
Question Type: Concept
30.
Where would federal agencies report information concerning their performance goals and performance results, along with their future challenges?
A.
Other accompanying information.
B.
Required supplemental information.
C.
Management discussion and analysis.
D.
Notes to the financial statements.
Difficulty: Medium
Question Type: Concept
31.
Which of the following is an accurate list of the three perspectives from which the federal government can be viewed, as described in SFFAS No. 2 "Entity and Display?"
A.
Function, department, and program.
B.
Organization, budget, and program.
C.
Budget, program, and line-item.
D.
Fund, activity, and account.
Difficulty: Medium
Question Type: Concept
32.
The management's discussion and analysis (MD&A) required in general purpose federal financial reporting is different than that required by GASB of state and local governments in that:
A.
It includes information about the agency’s performance goals and results in addition to financial activities.
B.
It is outside the general purpose federal financial report and is optional, not required.
C.
It is a part of the basic financial statements and, as a result, it is audited along with the financial statements.
D.
There are no significant differences.
Difficulty: Medium
Question Type: Concept
33.
Which of the following federal financial statements relies primarily on the use of actuarial assumptions and long-range projections for the information reported on the statement?
A.
Balance sheet.
B.
Statement of social insurance.
C.
Statement of custodial activity.
D.
Statement of fiduciary net assets.
Difficulty: Medium
Question Type: Concept
34.
Which of the following describes the usual flow of budgetary authority through the budgetary accounts of a federal agency?
A.
Apportionment, allotment, appropriation, commitment, obligation, expended appropriation.
B.
Allotment, commitment, obligation, expended appropriation, apportionment.
C.
Appropriation, apportionment, allotment, commitment, obligation, expended appropriation.
D.
Commitment, obligation, appropriation, apportionment, allotment, expended appropriation.
Difficulty: Medium
Question Type: Concept
35.
Which of the following statements is not true about the United States government-wide financial report?
A.
Since 1997, the financial statements of the U.S. government as a whole have been audited by the GAO.
B.
The majority of the 24 major federal agencies required to be audited have received unqualified audit opinions by the GAO.
C.
The Comptroller General of the United States has rendered a disclaimer of opinion on the U.S. Government's consolidated financial statements for as long as that office has audited these statements.
D.
The federal government received an unqualified opinion from the GAO on the most recent financial statements of the U.S. government as a whole.
Difficulty: Medium
Question Type: Concept
36.
Which of the following is required by OMB Circular A-136 in the basic financial statements?
A.
Statement of changes in net position.
B.
Statement of net assets.
C.
Statement of revenues, expenditures, and changes in fund balances.
D.
Statement of financing.
Difficulty: Medium
Question Type: Concept
Short Answer Questions 37.
The following are key terms in Chapter 17 that relate to accounting and financial reporting for federal agencies and the federal government: A. Apportionment B. Budgetary resources C. Expended appropriation D. Governmental assets E. Heritage assets F. Intragovernmental assets G. Stewardship investments H. Stewardship land For each of the following definitions, indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.
Difficulty: Medium
Question Type: Concept
Essay Questions 38.
Explain the "dual-track" accounting system used by federal agencies and why it is needed.
Difficulty: Medium
Question Type: Concept
39.
Explain the components of net position.
Difficulty: Medium
Question Type: Concept
40.
Explain the GAAP hierarchy used by federal government agencies.
Difficulty: Medium
Question Type: Concept
41.
"Each federal government agency should maintain a General Fund and as many other funds defined by the GASB as are appropriate." Do you agree? Why or why not?
Difficulty: Medium
Question Type: Concept
42.
Describe the budgetary accounts used in federal agency accounting and the flow of budgetary authority through those accounts.
Difficulty: Medium
Question Type: Concept
43.
Identify the office, officer, or department of the United States federal government that is responsible for each of the following:
A) Appropriations.
B) Apportionments.
C) Allotments.
D) Obligations.
Difficulty: Medium
Question Type: Concept
44.
The Federal Monuments Commission began operations on October 1, 2014. Show in general journal form all entries that should be made in budgetary and proprietary accounts of the agency to record the following events: A. The Congress passed, and the President signed, a one-year appropriation for fiscal year 2015 for the Monuments Commission in the amount of $30,000,000. B. The OMB notified the agency of the following apportionments of the 2015 appropriation: first quarter, $8,000,000; second quarter, $8,000,000; third quarter, $7,000,000; and fourth quarter, $7,000,000. C. The Commission Director allotted $1,500,000 for the operations of October 2014. D. Commitments for goods and services not yet ordered or received were recorded in the amount of $1,300,000. E. Purchase orders and contracts for services were recorded for the month of October 2014 in the amount of $1,250,000.
Difficulty: Medium
Question Type: Journal Entry
45.
Compute the missing amount in the following list of proprietary accounts of a federal government agency. Show all computations legibly with labels. Proprietary Accounts: Accounts Payable $ 1,200,000 Operating/Program Expenses 12,400,000 Accumulated Depreciation-Plant and Equipment 9,200,000 Cumulative Results of Operations 10/1/2013 ? Appropriations Used—2014 12,400,000 Fund Balance with Treasury—2014 4,800,000 Accounts Receivable 200,000 Operating Materials and Supplies 3,200,000 Plant and Equipment 30,000,000 Unexpended Appropriations—2014 3,600,000
Difficulty: Medium
Question Type: Calculation
46.
The Desert Conservation Agency was authorized by the United States Congress to commence operations on October 1, 2014. Record the following transactions in general journal form, as they should appear in the budgetary and proprietary accounts of the agency. For each entry indicate whether it affects the budgetary accounts or the proprietary accounts. A. The agency received official notice that its one-year appropriation passed by the Congress and signed by the President amounted to $350 million for operating expenses for the fiscal year and $100 million for acquisition of capital assets during the year. B. The Office of Management and Budget notified the agency that the entire appropriation had been apportioned. C. The head of the agency allotted $75 million for the first quarter's operating expenses, and $25 million for equipment to be ordered during the first quarter. D. Purchase orders and contracts for services recorded for the first quarter totaled $90 million (the agency does not record commitments prior to placing orders or entering into contracts). E. Total expenditures for the first quarter amounted to $70 million for operating expenses and $18 million for equipment, for which an obligation in the amount of $84 million had been previously recorded (see item D above). The expenditures were all paid from fund balance with U.S. Treasury.
Difficulty: Medium
Question Type: Journal Entry
47.
Explain the process of financial reporting of the U.S. Government as a whole. Does the federal government receive an unqualified audit opinion on its financial report?
Difficulty: Medium
Question Type: Concept
48.
Describe the purpose of a management's discussion and analysis (MD&A) in the general purpose federal financial report of a federal agency.
Difficulty: Medium
Question Type: Concept
49.
What is the difference between entity assets and nonentity assets?
Difficulty: Medium
Question Type: Concept
50.
Describe accounting for federal social insurance programs. Comment on the adequacy of current accounting standards in this area.
Difficulty: Medium
Question Type: Analysis
51.
What is a Performance and Accountability Report (PAR)? Describe its purpose and contents.
Difficulty: Medium
Question Type: Concept