Deck 14: Financial Reporting by the Federal Government

Question 1

The Statement of Changes in Net Position of a federal agency should articulate with net position on the agency's Balance Sheet.

Answer 1

True
Explanation: The total net position on the balance sheet should agree with ending net position on the Statement of Changes in Net Positon.

Question 2

The account Obligations - Undelivered Orders is credited when goods and services are received.

Answer 2

False
Explanation: The account Obligations - Undelivered Orders is debited when goods and services are received.

Question 3

Allotments are made at the agency level and assign portions of the appropriation to subunits or programs.

Answer 3

True
Explanation: After receiving an apportionment, a federal agency has the authority to divide the funds among its officers or programs in accordance with the spending bill. These are called allotments.

Question 4

Federal agencies must include a Managements' Discussion and Analysis in their financial report.

Question 5

Apportionments are issued by the OMB and establish the amount of an kl that will be available each quarter.

Question 6

The Federal Accounting Standards Advisory Board was formed by the Secretary of the Treasury, Director of OMB, and Comptroller General.

Question 7

Accounting standards for the federal government and its agencies are established by the Government Accountability Office.

Question 8

The Statement of Net Cost of a federal agency is prepared on the accrual basis of accounting.

Question 9

Accounting standards for the federal government and its agencies are established by the Federal Accounting Standards Advisory Board FASB).

Question 10

The Statement of Operations and Changes in Net Position for the consolidated report of the federal government is prepared on the modified accrual basis of accounting.

Question 11

The net position of a federal agency is comprised of Cumulative Results of Operations and Unexpended Appropriations.

Question 12

The Statement of Custodial Activity is not required of every federal agency but is prepared by the SEC, IRS and Customs.

Question 13

The proprietary accounts of a federal agency reflect the status of an appropriation.

Question 14

The account Fund Balance with Treasury is classified as an asset on a federal agency's balance sheet.

Question 15

The Statement of Budgetary Resources for a federal agency is prepared on the accrual basis.

Question 16

The difference between assets and liabilities of a federal agency is comprised of Fund Balance and may be classified as Nonspendable, Committed, Restricted, Assigned and Unassigned.

Question 17

The budgetary authority process for a federal agency begins with the Treasury Department issuing a warrant granting the agency the authority to withdraw funds.

Question 18

The proprietary accounts of a federal agency are used to prepare the accrual basis financial statements of the federal government and its agencies.

Question 19

Federal agencies must include a Statement of Cash Flows in their annual report.

Question 20

The Department of Treasury maintains a government-wide system of accounts and prepares the federal government's consolidated financial statements.

Question 21

Which of the following is responsible for preparing the federal government's consolidated financial statements?

A) Congressional Budget Office
B) Office of Management and Budget
C) Department of Treasury
D) Government Accountability Office

Question 22

Which of the following is are) true regarding the Chief Financial Officers Act?

A) The Act created the position of chief financial officer within federal agencies
B) The Act called for audits of the financial statements of federal agencies
C) Both a) and b) above
D) Neither a) nor b) above

Question 23

Which of the following is are) true regarding the Government Accountability Office?

A) The GAO establishes accounting standards applicable to the federal government and its agencies
B) The GAO establishes auditing standards applicable to the federal government and its agencies
C) Both a) and b) above
D) Neither a) nor b) above

Question 24

The federal government is not required to include MD&A in its financial statements. It is strongly encouraged, however.

Question 25

Typically, budgetary authority that is not obligated by a federal agency before the end of the fiscal year rolls over and is available for the following fiscal year.

Question 26

Which of the following is one of the principal organizations that formed the Federal Accounting Standards Advisory Board?

A) Department of Treasury
B) Congressional Budget Office
C) American Institute of CPAs
D) All of the above

Question 27

The Reconciliation of Net Operating Cost and Unified Budget Deficit is similar in purpose to the reconciliation of the Statement of Activities to the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balance required by state and local governments.

Question 28

The Office of Management and Budget, together with the Government Accountability Office GAO) and the Department of the Treasury, are the primary organizations charged with financial management of the federal government.

Question 29

Which organization promulgates Statements of Federal Financial Accounting Standards?

A) The American Institute of Certified Public Accountants
B) The Federal Accounting Standards Advisory Board
C) The U.S. Office of Management and Budget
D) The U.S. Government Accountability Office

Question 30

The annual financial report of the U.S. government is prepared by the Government Accountability Office and audited by the Department of the Treasury.

Question 31

Which of the following is responsible for auditing the federal government' consolidated financial statements?

A) Congressional Budget Office
B) US Department of Internal Audit
C) Office of Management and Budget
D) Government Accountability Office

Question 32

Which of the following is not required in a federal agency's financial report?

A) Balance Sheet
B) Statement of Cash Flows
C) Statement of Budgetary Resources
D) Statement of Changes in Net Position

Question 33

The accounting systems of federal agencies must serve both the external financial reporting needs mandated by the Chief Financial Officers' Act and the necessity of having internal budgetary controls over the spending of public resources. This is accomplished through the maintenance of two self-balancing sets of accounts, termed budgetary and control accounts.

Question 34

The Statement of Custodial Activity is required only if the government agency collects nonexchange funds to be turned over to the Treasury.

Question 35

The purpose of the FASAB is to develop and issue accounting standards for federal, state and local government reporting.

Question 36

The annual financial report of the U.S. government is prepared by the Department of the Treasury and audited by the Government Accountability Office.

Question 37

Which of the following is are) true regarding Federal Accounting Standards Advisory Board?

A) The Board is called "Advisory" because Statements issued by the board are recommended accounting standards but are not "level A GAAP" for federal agencies
B) Statements issued by the board are recognized as the highest level of authoritative standard for federal government entities
C) Both a) and b) above
D) Neither a) nor b) above

Question 38

The purpose of apportionment is to prevent the federal agency from spending an appropriation too rapidly and having to request a supplemental appropriation later in the year.

Question 39

Which of the following organizations is are) part of the executive branch of the federal government?

A) Government Accountability Office
B) Office of Management and Budget
C) Both a) and b) above
D) Neither a) nor b) above

Question 40

Because federal entities have both budgetary and financial reporting requirements, a dual-track accounting system is employed using budgetary and proprietary accounts.

Question 41

Assume a spending bill has been passed by Congress and signed by the President. The journal entries at the agency level to record this event will include:

A) a debit to the account Unexpended Appropriations
B) a debit to the account Unapportioned Authority
C) a debit to the account Fund Balance with Treasury
D) None of the above

Question 42

Which of the following events will result in a journal entry being recorded in both the budgetary and proprietary accounts of a federal agency?

A) Treasury notifies the agency that Congress passed legislation signed by the President) granting budgetary authority to fund its activities.
B) The agency places orders for goods or services.
C) Both a) and b)
D) Neither a) nor b)

Question 43

At what point in the budgetary authority process may a federal agency or its subunits begin to place orders for goods and services?

A) Obligation
B) Apportionment
C) Appropriation
D) Allotment

Question 44

Which of the following statements appearing in the federal government's consolidated financial report are prepared on the accrual basis of accounting?

A) Balance Sheet
B) Statement of Operations and Changes in Net Position
C) Both a) and b) above
D) Neither a) nor b) above

Question 45

Which of the following is not required in a federal agency's financial report?

A) Management's Discussion and Analysis
B) Notes to the Financial Statements
C) Required Supplemental Information
D) Budgetary Comparison Schedule

Question 46

Which of the following is are) accurate regarding a federal agency's Statement of Net Costs?

A) Net costs reported on the Statement of Net Costs may differ from those appearing in the Statement of Changes in Net Position, since the latter are measured on the budgetary basis.
B) The Statement of Net Costs provides greater detail about the cost of the Agency's programs, but agrees in total net cost reported on the Statement of Changes in Net Position
C) Both a) and b) above
D) Neither a) nor b) above

Question 47

Which of the following steps in the budgetary authority process occurs when Congress passes a spending bill which is signed by the President?

A) Apportionment
B) Appropriation
C) Allotment
D) Obligation

Question 48

Which of the following steps in the budgetary authority process occurs when the Office of Management and Budget establishes the quarterly amount available to a federal agency for spending?

A) Apportionment
B) Appropriation
C) Allotment
D) Obligation

Question 49

Which of the following is accurate regarding a federal agency's Statement of Net Costs?

A) Costs are reported within the broad categories of current, capital, and debt service
B) It is similar in presentation to the GASB government-wide Statement of Activities in that earned revenues are subtracted from costs to determine the net cost of government services.
C) Neither a) nor b) above
D) Both a) and b) above

Question 50

Which of the following is are) accurate regarding a federal agency's Statement of Budgetary Resources?

A) Outlays are measured using the budgetary basis of accounting.
B) The statement reports the status of budgetary resources at year end.
C) Neither a) nor b)
D) Both a) and b)

Question 51

Which of the following is true regarding the Balance Sheet of a federal agency?

A) The balance sheet is prepared using the economic resource measurement focus and accrual accounting.
B) Assets are measured on the modified accrual basis.
C) The difference between assets and liabilities is termed "Net Assets".
D) Assets are separated between current and noncurrent.

Question 52

Which of the following federal agencies are required to report a Statement of Custodial Activity?

A) Customs and border protection
B) Department of Interior
C) Department of Defense
D) All of the above

Question 53

Which of the following accounts are used to display the difference between assets and liabilities in a federal agency Balance Sheet?

A) Unrestricted Net Position, Restricted Net Position, and Net Investment in Capital Assets.
B) Unassigned, Assigned, Committed, Restricted and Nonspendable fund balance.
C) Unrestricted, Temporarily Restricted, and Permanently Restricted Net Assets
D) Unexpended Appropriations and Cumulative Results of Operations

Question 54

Which of the following does not appear in the federal government's consolidated financial report?

A) Management's Discussion and Analysis
B) Statement of Social Insurance
C) Statement of Cash Flows
D) Auditors Report

Question 55

Which of the following should appear within the equity net position) section of a federal agency balance sheet?

A) Net Position - Unexpended Appropriations
B) Fund Balance with Treasury
C) Both a) and b) above
D) Neither a) nor b) above

Question 56

Which of the following federal entities would be required to prepare a Statement of Custodial Activity?

A) Department of Defense
B) Internal Revenue Service
C) Department of Homeland Security
D) Department of Health and Human Services

Question 57

Which of the following are included in the Financial Snapshot section of the federal government's Citizen's Guide to the Financial Report of the US Government?

A) The Net Operating Cost of the federal government
B) The Net Position assets minus liabilities) of the federal government
C) Both a) and b) above
D) Neither a) nor b) above

Question 58

Which of the following is are) accurate regarding a federal agency's Statement of Changes in Net Position?

A) The statement starts with the beginning of year balances in the net position accounts and reconciles these to the ending balances appearing on the agency's Balance Sheet.
B) The statement does not report Appropriations Received since this is a budgetary account and does not affect net position.
C) Both a) and b) above
D) Neither a) nor b) above

Question 59

Which of the following are true of the proprietary accounts of the federal government?

A) The accounts provide a record by which federal expenditures may be traced to the budgetary authority granted by Congress.
B) The accounts are used to present the financial position and results of operations of the federal government and its agencies using the accrual basis of accounting.
C) Both a) and b) above
D) Neither a) nor b) above

Question 60

Which of the following steps in the budgetary authority process occurs when a federal agency issues a purchase order?

A) Obligation
B) Apportionment
C) Appropriation
D) Allotment

Question 61

In addition to the Balance Sheet, Statement of Net Cost and Statement of Changes in Net Position, Federal government reporting standards includes which of the following:

A) MD&A, audit report & RSI
B) Audit report, Statement of Budgetary Resources and RSI
C) MD&A, RSI and audit report
D) MD&A, audit report, Statement of Budgetary Resources and RSI

Question 62

Assume a federal agency places orders for contracted services supporting a federal program. The journal entries at the agency level to record this event will include:

A) a credit to the account Expended Appropriations
B) a debit to the account Allotments
C) Both a) and b)
D) Neither a) nor b)

Question 63

Fund Balance with Treasury is an example of which type of federal government account?
$\begin{array}{cc}\text { Budgetary } & \text { Proprietary } \\\text { Account } & \text { Account }\end{array}$

A) $\text { Yes\quad\quad\quad\quad\quad\quad Yes }$
B) $\text { No } \quad\quad\quad\quad\quad\quad \text { Yes }$
C) $\text { Yes, } \quad\quad\quad\quad\quad\quad \text { No }$
D) $\text { No } \quad\quad\quad\quad\quad\quad\quad \text { No }$

Question 64

A federal agency prepared the following schedule showing the status of federal appropriations at the end of the first quarter assume all spending by the agency is done through purchase order):
$\begin{array}{ll}\text { Amount }&\text { Status }\\\hline\$ 600,000 & \text { - Unapportioned authority } \\10,000 & \text { - Apportionments. } \\35,000 & \text { - Allotments. } \\25,000 & \text { - Obligations for undelivered orders. } \\160,000 & \text { - Expended appropriations }\\\$830,000&\text { Total appropriations }\end{array}$
What is the total amount allotted to subunits or programs within the agency during the first quarter of the year?

A) 230,000
B) 220,000
C) 185,000
D) 160,000

Question 65

Assume a federal agency places orders for contracted services supporting a federal program. The journal entries at the agency level to record this event will include:

A) a debit to the account Allotments
B) a credit to the account Obligations - Undelivered Orders
C) Both a) and b)
D) Neither a) nor b)

Question 66

Assume the director of a federal agency allots a portion of the agency's apportionment to subunits within the agency. The journal entries at the agency level to record this event will include:

A) a debit to the account Allotments
B) a debit to the account Apportionments
C) a credit to the account Obligations - Undelivered Orders
D) None of the above

Question 67

Which of the following events will result in a journal entry being recorded in both the budgetary and proprietary accounts of a federal agency?

A) Goods or services are received and approved for payment.
B) OMB establishes the amount of the total appropriation that the agency may expend in the first quarter.
C) Neither a) nor b)
D) Both a) and b)

Question 68

Assume a federal agency has $ 150,000 of unobligated budgetary authority at the end of the fiscal year that must be returned to Treasury. The journal entry at the agency level to record this event in the proprietary accounts will include:

A) a debit to the account Unexpended Appropriations
B) a credit to the account Fund Balance with Treasury
C) Both a) and b)
D) Neither a) nor b)

Question 69

The purpose of the FASAB is to develop and issue federal accounting standards.
Which of the following is not accurate?

A) FASAB has developed a conceptual framework to guide the Board in the development of new standards. The Concept Statements are authoritative and must be followed when reporting the financial results for federal government entities.
B) The Board is considered "advisory" in that the standards must be approved by the three founding organizations Treasury, OMB, and GAO).
C) The Concept Statements developed by the FASAB are not authoritative, but they identify user needs, the objectives of the financial reports, and definitions of the reporting entity and the elements of the financial statements.
D) The standards called Statements of Federal Financial Accounting Standards) are recognized as the highest level of authoritative standard in the AICPA's Code of Professional Conduct.

Question 70

Which of the following is correct with respect to The Statement of Budgetary Resources?

A) The Statement of Budgetary Resources follows the budgetary not accrual) basis of accounting.
B) The statement provides information on how budgetary resources were obtained and the status of those resources at year-end.
C) The budgetary basis of accounting is prescribed by OMB, not FASAB.
D) All of the above statements are correct.

Question 71

A federal agency prepared the following schedule showing the status of federal appropriations at the end of the first quarter:
$\begin{array}{ll}\text { Amount }&\text { Status }\\\hline\$ 700,000 & \text { - Unapportioned authority } \\40,000 & \text { - Apportionments. } \\65,000 & \text { - Allotments. } \\15,000 & \text { - Obligations for undelivered orders. } \\120,000 & \text { - Expended appropriations }\\\$940,000&\text { Total appropriations }\end{array}$
What is the total amount of purchase orders placed in the first quarter of the year?

A) 65,000
B) 80,000
C) 120,000
D) 135,000

Question 72

Operating Expense: Contracted Services is an example of which type of federal government account?
$\begin{array}{cc}\text { Budgetary } & \text { Proprietary } \\\text { Account } & \text { Account }\end{array}$

A) $\text { No } \quad\quad\quad\quad\quad \text { Yes }$
B) $\text { Yes, } \quad\quad\quad\quad\quad \text { No }$
C) $\text { No\quad\quad\quad\quad\quad\quad No }$
D) $\text { Yes } \quad\quad\quad\quad\quad \text { Yes }$

Question 73

Allotments is an example of which type of federal government account?
$\begin{array}{cc}\text { Budgetary } & \text { Proprietary } \\\text { Account } & \text { Account }\end{array}$

A) $\text { Yes\quad\quad\quad\quad\quad\quad No }$
B) $\text { No } \quad\quad\quad\quad\quad\quad \text { No }$
C) $\text { Yes, } \quad\quad\quad\quad\quad\quad \text { Yes }$
D) $\text { No } \quad\quad\quad\quad\quad\quad \text { Yes }$

Question 74

The purpose of the FASAB is to develop and issue federal accounting standards. The Board comprises ten members. What is the makeup of the board?

A) Two from the executive branch, two from the legislative branch, two who are appointed by the AICPA and five who are not employees of the federal government.
B) Three from the executive branch, three from the legislative branch, and four who are not employees of the federal government.
C) One from the executive branch, one from the legislative branch, two who are appointed by the AICPA and six who are not employees of the federal government.
D) Two from the executive branch, two from the legislative branch, and six who are not employees of the federal government.

Question 75

Assume an outstanding account payable of a federal agency is paid. The journal entries at the agency level to record this event will include:

A) a debit to the account Accounts Payable
B) a credit to the account Cash
C) Both a) and b)
D) Neither a) nor b)

Question 76

Which of the following statements is correct with respect to The Statement of Custodial Activity?

A) The statement is required only if the government agency collects nonexchange funds to be turned over to the Treasury.
B) Because the collecting entity cannot use the funds for its own activities, the activities are analogous to an agency fund of a state or local government.
C) Both a) and b)
D) Neither a) nor b)

Question 77

Assume a federal agency receives supplies that had been previously ordered that will be used to support a federal program. The journal entries at the agency level to record this event will include:

A) a credit to a liability account such as Accounts Payable
B) a debit to the account Unexpended Appropriations
C) Both a) and b)
D) Neither a) nor b)

Question 78

Assume the OMB apportions 1/4^th of an appropriation to a federal agency for the first quarter of the fiscal year. The journal entries at the agency level to record this event will include:

A) a debit to the account Unapportioned Authority
B) a debit to the account Unexpended Appropriations
C) a credit to the account Fund Balance with Treasury
D) None of the above

Question 79

The entry to record appropriations is notable because it involves the use of account titles that are unique to the federal government. Which of the following statements is not correct?

A) The account Unexpended Appropriations is credited at the time of an appropriation.
B) Unexpended Appropriations is an asset on the federal agency's balance sheet is called "Due from Treasury.
C) Federal agencies do not typically maintain cash balances. Instead, the ability to draw cash from the Treasury is recognized as an asset at the time of an appropriation with the account Fund Balance with Treasury.
D) Payments made by Treasury on behalf of the agency are reflected with a credit to Fund Balance with Treasury.

Question 80

Which of the following steps in the federal government's budgetary authority process is most similar to the recording of encumbrances by state and local governments?

A) Apportionment
B) Appropriation
C) Allotment
D) Obligation