Question 1

When the federal government makes a direct loan at an interest rate below the prevailing Treasury rate a subsidized loan, an asset should be recorded for which of the following amounts?

Accepted Answer

The correct answer is C) The present value of the future principal and interest payments discounted at the comparable Treasury rate. This approach reflects the true economic value of the loan to the government, considering the subsidy element (the difference between the loan's interest rate and the prevailing Treasury rate).

Question 2

Amounts due to social security beneficiaries should be "booked" recorded as a liability

Accepted Answer

The answer of Amounts due to social security beneficiaries should...

Question 3

FASAB requires that federal agencies capitalize certain assets.Which of the following assets should be capitalized?

Accepted Answer

FASAB requires federal agencies to capitalize assets that meet certain criteria, including having a useful life of more than 2 years and a cost of over $25,000. Weapons systems and space exploration equipment likely meet these criteria and therefore should be capitalized. The other options do not meet the criteria for capitalization under FASAB.

Question 4

If a federal agency should have collected $400 from a nonexchange revenue source, but it actually collected $430, the financial statements should reflect

Accepted Answer

The answer of If a federal agency should have collected...

Question 5

The Allowance for Unrealized Holding Gains that appears in the cost of goods sold section of a federal financial statement effectively does which of the following?

Accepted Answer

The Allowance for Unrealized Holding Gains adjusts the latest acquisition cost inventory valuation to the historical cost valuation, ensuring that the inventory is reported at historical cost rather than current market value.

Question 6

When the federal government guarantees a loan made by a private lender, the federal government should record a liability for which of the following amounts?

Accepted Answer

The correct answer is B) The present value of the anticipated payments to the private lender discounted at the government agency's rate. This approach reflects the government's obligation in terms of the present value of the expected future outflows, using its own borrowing rate to discount those future payments. This method provides a more accurate reflection of the government's financial commitment under the guarantee.

Question 7

When the federal government makes a direct loan at an interest rate below the prevailing Treasury rate a subsidized loan, an expense should be recorded for which of the following amounts?

Accepted Answer

The expense should be recorded as the difference between the face value of the loan and the present value of the estimated net cash receipts, reflecting the subsidy provided by the government.

Question 8

The federal government is required to recognize liabilities on nonexchange transactions

Accepted Answer

The answer of The federal government is required to recognize...

Question 9

The FASAB allows entities to value inventories held for sale at which of the following values?

Accepted Answer

The FASAB allows entities to value inventories held for sale at historical cost, using FIFO or weighted average method, or at the latest acquisition cost. Therefore, all options (A, B, and C) are correct.

Question 10

The Government Performance and Results Act of 1993 requires federal agencies to do which of the following?

Accepted Answer

The Government Performance and Results Act of 1993 requires federal agencies to do all of the above: develop strategic plans and operational objectives, develop measures of performance, and report on the extent to which they have met their objectives.

Question 11

Which of the following differentiates the accounting and reporting for federal government agencies versus state and local governmental entities?

Accepted Answer

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Question 12

The federal government has declared a specific area a "natural disaster" area making residents of the area eligible for payments from the federal government.When should the liability for such payments be recorded?

Accepted Answer

The answer of The federal government has declared a specific...

Question 13

The FASAB allows entities to value inventories held for use at which of the following values?

Accepted Answer

The FASAB allows entities to value inventories held for use at historical cost.

Quiz 17: Federal Government Accounting