Deck 15: Managing for Results

Question 1

In which of the following steps of the management cycle of governments and not-for-profit entities are accountants least involved?

A)Performing cost benefit analysis on proposed programs.
B)Selecting among alternative programs.
C)Preparing financial reports.
D)Evaluating efficiency and effectiveness of programs.

Answer 1

B

Question 2

Many of the benefits of program budgeting may be ascribed to the organizational self-examination that it requires at the outset.

Answer 2

True

Question 3

An important part of capital budgeting is to compare alternative means of achieving the same objective.

Answer 3

True

Question 4

It is widely accepted that capital assets should be financed with resources on hand to achieve interperiod equity.

Question 5

"Outputs" is a term used to indicate the quantity or units of service provided by an activity.

Question 6

It is difficult for accountants to have a role beyond auditing the financial statements of governments and not-for-profits.

Question 7

The GASB's SEA reporting proposals focus on measures of efforts,measures of accomplishments,and measures that relate efforts to accomplishments.

Question 8

A disadvantage of evaluating capital expenditures separately from operating expenditures is that it is easy to overlook operating costs associated with newly acquired assets.

Question 9

Accountants are actively involved in collecting and analyzing data to be used by public policy makers.Which of the following other groups might also be involved in the data collection and analysis process?

A)Statisticians.
B)Economists.
C)Program managers.
D)All of the above.

Question 10

Which of the following is a true statement regarding the implementation phase of a government program?

A)Internal accountants are not involved;only program managers are involved.
B)Internal accountants are actively involved,preparing budgets,controlling costs,and preparing operating reports.
C)Internal accountants have only a minor role,preparing reports for external parties.
D)Internal accountants have final say in program choices.

Question 11

One of the principal disadvantages of zero-base budgeting is that it requires budgetary units to provide information that may never be used in the decision process.

Question 12

Program outcomes frequently are more difficult to measure than inputs and outputs.

Question 13

An organization's mission and goals derive from its operational objectives.

Question 14

Most accounting organizations support the notion that performance measures should be included in general-purpose annual financial reports.

Question 15

Which of the following is NOT the role of policy makers in solving social problems?

A)Selecting among options
B)Developing alternatives.
C)Appropriating resources required to implement programs
D)Establishing expected goals.

Question 16

Rather than cash inflows,the potential benefits of many capital assets can be expressed as cash savings to governments and not-for-profits.

Question 17

Benefit-cost analysis has fallen from favor among management experts because it usurps the role of informed judgment.

Question 18

Zero-base budgeting requires the periodic review of all programs,not just new ones.

Question 19

Which of the following groups is least likely to be involved in evaluating the efficiency and effectiveness of government programs?

A)Accountants.
B)Legislators.
C)Economists.
D)Statisticians.

Question 20

The Government Performance and Results Act of 1993 requires federal agencies to focus on explicit near-term objectives and performance measures.

Question 21

Aid for Friends,a not-for-profit entity,provides temporary shelter for the homeless,provides temporary housing and other assistance for victims of spousal abuse,serves meals to the needy in a congregate setting,operates a second-hand clothing store,and operates a food bank to provide food for those temporarily in need.Which of the following is the best statement of operating objectives for Aid for Friends?

A)Our objective is to provide food and shelter for the needy.
B)Our objective is to provide assistance to those in need.
C)Our objective is to provide temporary assistance to those in need.
D)Our objective is to help the needy achieve financial independence.

Question 22

Which of the following is a reason for governments and not-for-profit entities to incorporate service efforts and accomplishments SEA)measures into their management process?

A)Measuring and reporting upon SEA helps management determine short-term cash flow requirements.
B)SEA measures allow management to make objective assessments about whether the goals of the government are worth achieving.
C)SEA reporting fosters sound budgeting and administration.
D)SEA fosters budgetary compliance and custodianship of resources.

Question 23

Program budgeting,although highly popular and successful,has many disadvantages or drawbacks.Which of the following is an advantage or benefit of program budgeting?

A)It may provide too much information.
B)It may be applied perfunctorily after its initial implementation.
C)It may not live up to its expectations.
D)It may discourage funding at levels other than those that will result in actual increases in results.

Question 24

Help,Inc. ,a not-for-profit entity dedicated to providing assistance to the needy,has submitted to its governing body a budget that includes the following budgeted expenditures. $$\begin{array} { l l } \text { Nutrition } & \$ 250,000 \\\text { Family housing assistance } & \$ 300,000 \\\text { Shelter House } & \$ 200,000 \\\text { Legal aid } & \$ 100,000 \\\text { Medical assistance } & \$ 150,000\end{array}$$ Which of the following best describes the budgeting practices of this entity?

A)The entity uses program budgeting techniques.
B)The entity uses object classification budgeting techniques.
C)The entity uses zero-base budgeting techniques.
D)The entity uses priority-based budgeting techniques.

Question 25

Use the following information to answer Questions
The City Swimming Pool is considering several options for maintaining the grounds around the pool area over the next ten years.One option is to buy a tractor with equipment for cleaning the underbrush and cutting the grass.A second option is to contract out with a local garden and nursery center that provides this kind of service.A third option is to hire many local youths to do most of the work by hand.The city already has several small lawnmowers and grass-cutting equipment.
$\begin{array}{llcc}\text { Option \#1 }\\\text {Cost of tractor and equipment useful life 10 years) }& \$ 220,000 \\\text {Salvage value of tractor in 10 years }& 20,000\\\text {Yearly cost of operator }& 6,000 \\\text {Yearly maintenance and upkeep, supplies, etc.}& 3,000\\ \text {Option \#2 } \\ \text { Yearly fees } & \$ 36,000\\ \text { Option \#3 } \\\text { Yearly cost of part-time labor}&\$ 32,000 \\\text { Yearly cost of supplies, equipment repar, etc.}&1,000\\\text {Present value factors @ 6 \% }\\\text {\$1 due in ten years}&.55839\\\text {Annuity of \$ 1 for 10 years}&7.36009 \\\end{array}$


-What is the present value of Option #1?

A)$220,000.
B)$275,072.
C)$297,408.
D)$433,442.

Question 26

All governments and not-for-profit entities should establish goals and objectives.Which of the following is a desirable characteristic of an operational objective?

A)An operational objective should be open to interpretation.
B)An operational objective should be measurable.
C)An operational objective should be a statement of aspirations.
D)An operational objective should be accomplishable by an unspecified future date.

Question 27

Use the following information to answer Questions
A piece of federal legislation has as one of its objectives "improving the health of older Americans." Title 20 of that legislation provides for granting federal funds to governments and not-for-profit entities to provide nutritious hot meals to older Americans in congregate settings.Senior Citizens Center,a not-for-profit entity,receives funding under this legislation.The center determines the following for a one-month period:
$\begin{array}{lr}\text { Number of meals served } & 500 \\\text { Total number of individuals participating in the program } & 25 \\\text { Total meals costs incurred } & \$ 860 \\\text { Average cost per meal } & \$ 1.72\end{array}$

-The numerical value that best represents outcomes is

A)500
B)$1.72
C)$860
D)None of the above.

Question 28

Which of the following groups are involved in auditing a program?

A)Accountants.
B)Statisticians.
C)Economists.
D)All of the above.

Question 29

Which of the following is an example of a cost-outcome measure?

A)Cost per passenger-mile on public transit.
B)Cost per hot meal served.
C)Cost per legal case handled.
D)Cost per client placed in gainful employment.

Question 30

Which of the following is an example of an efficiency measure?

A)Cost per client placed in an appropriate job.
B)Cost per ton of garbage collected.
C)Cost per gallon of water suitable for drinking.
D)Cost per child reading at grade level.

Question 31

Because of the difficulty of measuring quality teaching,many colleges and universities rely heavily on student evaluations of the quality of instruction and accomplishment of course objectives.Which of the following is are)a true statements)?

A)This is a good practice,which may improve the quality of instruction.
B)This is a good idea but may have unintended negative consequences by causing faculty to decrease the rigor of a course.
C)Both are true.
D)Neither is true.

Question 32

With regard to audits of SEA,which of the following might be appropriate for an auditor to do?

A)Assess the appropriateness of the organization's basic objectives.
B)Verify that the government selected the correct indicators to gauge whether its objectives were achieved.
C)Evaluate whether SEA data is fairly presented.
D)Evaluate the usefulness of SEA data.

Question 33

College professors are evaluated on teaching,research,and service.Which of the following would be a surrogate for the desired operational objective of "Engage in research that expands the horizons of knowledge"?

A)Value of research grants received.
B)Number of publications in peer-reviewed journals.
C)Both of the above.
D)Neither of the above.

Question 34

Use the following information to answer Questions
A piece of federal legislation has as one of its objectives "improving the health of older Americans." Title 20 of that legislation provides for granting federal funds to governments and not-for-profit entities to provide nutritious hot meals to older Americans in congregate settings.Senior Citizens Center,a not-for-profit entity,receives funding under this legislation.The center determines the following for a one-month period:
$\begin{array}{lr}\text { Number of meals served } & 500 \\\text { Total number of individuals participating in the program } & 25 \\\text { Total meals costs incurred } & \$ 860 \\\text { Average cost per meal } & \$ 1.72\end{array}$

-The numerical value that best represents outputs of this program is

A)500
B)$1.72
C)$860
D)None of the above.

Question 35

Which of the following is true about budgets prepared by entities that use program budgeting techniques?

A)The budget package will include information about the object classification expenditures necessary to accomplish a specific goal or objective.
B)The budget package will generally include information about the costs of providing a variety of levels of service of the same program.
C)The budget package will generally include information about the importance of the activity in accomplishing the entity's objectives,alternatives methods of accomplishing the objective,and the consequences of not performing the activity.
D)All of the above can be true.

Question 36

At many colleges and universities,students are asked to evaluate the quality of instruction received and course content for all undergraduate courses.The evaluations are used for which of the following?

A)As an outcome measure.
B)As an output measure.
C)As a surrogate for an outcome measure.
D)As a surrogate for an output measure.

Question 37

Which of the following is NOT an example of a performance budget?

A)Program budget.
B)Object classification budget.
C)Zero-base budget.
D)Priority-based budget.

Question 38

An accounting program has determined that preparing students for careers in public accounting is the program's goal.Which of the following measurements is the best outcomes measurement for this accounting program?

A)Number of accounting majors that graduate.
B)Number of students that pass the CPA examination.
C)Number of students in management positions in public accounting firms ten years after graduation.
D)Number of students employed in public accounting within one year of graduation.

Question 39

Which of the following is NOT one of the three categories of SEA measures identified by the GASB?

A)Measures of efforts.
B)Measures of financial stewardship.
C)Measures of accomplishment.
D)Measures that relate efforts to accomplishments.

Question 40

Which of the following is true about zero-based budgeting?

A)It is a variant of program budgeting.
B)It requires activities of the entity to be evaluated over a five-year period.
C)It currently is used by most state and local governments.
D)It is incremental in approach.

Question 41

Which of the following best describes the role of benefit-cost analysis in the capital budgeting process by governments and not-for-profit entities?

A)It may be used to enhance the objectivity of decision-making.
B)Because all costs and all benefits can be quantified,it removes subjectivity from the decision process.
C)It eliminates the role of value judgments in the decision-making process.
D)It ensures that decisions about capital asset acquisition will be consistent with organizational goals and objectives.

Question 42

Due to limited resources,Johnson City must select from among the following capital projects.Which project should the city select?

A)Court-ordered improvements to the City Jail.
B)Repairing the roof on City Hall.
C)Replacing an inefficient data processing system with a more efficient system.
D)Adding two new police cars to the fleet.

Question 43

The GASB indicates that the information in an SEA report should have relevance.If it does,then users can be sure that

A)The information is free from bias.
B)The information is consistent with information reported in financial statements.
C)The information helps users assess the organization's objectives.
D)Even the quantitative information is understandable.

Question 44

Zero-base budgeting is a form of

A)Incremental budgeting introduced in the 1960s.
B)Program budgeting introduced in the 1970s.
C)Performance budgeting introduced in the 1980s.
D)Traditional budgeting revamped for the new millennium.

Question 45

A benefit-cost ratio for a not-for-profit organization's program is

A)A comparison between cash received and cash paid in a given program year.
B)Total projected annual benefits/total projected costs over the life of a program.
C)Program outcomes/program inputs for each five-year period.
D)Present value of net annual benefits from a program/initial investment in the program.

Question 46

Use the following information to answer Questions
The City Swimming Pool is considering several options for maintaining the grounds around the pool area over the next ten years.One option is to buy a tractor with equipment for cleaning the underbrush and cutting the grass.A second option is to contract out with a local garden and nursery center that provides this kind of service.A third option is to hire many local youths to do most of the work by hand.The city already has several small lawnmowers and grass-cutting equipment.
$\begin{array}{llcc}\text { Option \#1 }\\\text {Cost of tractor and equipment useful life 10 years) }& \$ 220,000 \\\text {Salvage value of tractor in 10 years }& 20,000\\\text {Yearly cost of operator }& 6,000 \\\text {Yearly maintenance and upkeep, supplies, etc.}& 3,000\\ \text {Option \#2 } \\ \text { Yearly fees } & \$ 36,000\\ \text { Option \#3 } \\\text { Yearly cost of part-time labor}&\$ 32,000 \\\text { Yearly cost of supplies, equipment repar, etc.}&1,000\\\text {Present value factors @ 6 \% }\\\text {\$1 due in ten years}&.55839\\\text {Annuity of \$ 1 for 10 years}&7.36009 \\\end{array}$


-Which option should the city select based solely on cost?

A)Option #1
B)Option #2
C)Option #3
D)Unable to determine.

Question 47

Use the following information to answer Questions
The City Swimming Pool is considering several options for maintaining the grounds around the pool area over the next ten years.One option is to buy a tractor with equipment for cleaning the underbrush and cutting the grass.A second option is to contract out with a local garden and nursery center that provides this kind of service.A third option is to hire many local youths to do most of the work by hand.The city already has several small lawnmowers and grass-cutting equipment.
$\begin{array}{llcc}\text { Option \#1 }\\\text {Cost of tractor and equipment useful life 10 years) }& \$ 220,000 \\\text {Salvage value of tractor in 10 years }& 20,000\\\text {Yearly cost of operator }& 6,000 \\\text {Yearly maintenance and upkeep, supplies, etc.}& 3,000\\ \text {Option \#2 } \\ \text { Yearly fees } & \$ 36,000\\ \text { Option \#3 } \\\text { Yearly cost of part-time labor}&\$ 32,000 \\\text { Yearly cost of supplies, equipment repar, etc.}&1,000\\\text {Present value factors @ 6 \% }\\\text {\$1 due in ten years}&.55839\\\text {Annuity of \$ 1 for 10 years}&7.36009 \\\end{array}$


-What is the present value of Option #3?

A)$ 18,426.
B)$235,522.
C)$236,080.
D)$242,882.

Question 48

The concepts of outputs and outcomes are not the same because

A)Outputs measure how many units of service an activity produced,whereas outcomes measure the results that the activity produced compared with the activity's objectives.
B)Outputs are quantifiable whereas outcomes are not.
C)Outcomes are subject to audit whereas outputs are not.
D)Outputs can be evaluated in relation to inputs,but outcomes cannot be related to either inputs or outputs.

Question 49

Use the following information to answer Questions
The City Swimming Pool is considering several options for maintaining the grounds around the pool area over the next ten years.One option is to buy a tractor with equipment for cleaning the underbrush and cutting the grass.A second option is to contract out with a local garden and nursery center that provides this kind of service.A third option is to hire many local youths to do most of the work by hand.The city already has several small lawnmowers and grass-cutting equipment.
$\begin{array}{llcc}\text { Option \#1 }\\\text {Cost of tractor and equipment useful life 10 years) }& \$ 220,000 \\\text {Salvage value of tractor in 10 years }& 20,000\\\text {Yearly cost of operator }& 6,000 \\\text {Yearly maintenance and upkeep, supplies, etc.}& 3,000\\ \text {Option \#2 } \\ \text { Yearly fees } & \$ 36,000\\ \text { Option \#3 } \\\text { Yearly cost of part-time labor}&\$ 32,000 \\\text { Yearly cost of supplies, equipment repar, etc.}&1,000\\\text {Present value factors @ 6 \% }\\\text {\$1 due in ten years}&.55839\\\text {Annuity of \$ 1 for 10 years}&7.36009 \\\end{array}$


-What is the present value of Option #2?

A)$ 20,102.
B)$ 36,000.
C)$264,964.
D)$285,066.

Question 50

A significant difference between not-for-profit organizations and businesses with regard to investments in capital fixed)assets is that

A)Not-for-profits generally do not invest in capital assets.
B)Unlike businesses,not-for-profits do not discount projected future cash flows when evaluating the benefit-cost of an asset acquisition.
C)Unlike businesses,not-for-profits do not include the estimated salvage value of a capital asset in considering whether or not to acquire it.
D)When considering the merit of asset acquisitions,maximizing future cash flows is not the principal objective of a not-for-profit.