Question 1

The United States Government Combined Statement of Receipts, Outlays, and Balances is prepared on which of the following bases of accounting?

Accepted Answer

The answer of The United States Government Combined Statement of...

Question 2

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 mandates that federal agencies develop strategic plans, establish performance measures, and report on their progress in meeting objectives, encompassing all the actions listed in options A, B, and C.

Question 3

The federal government is required to recognize liabilities from nonexchange transactions

Accepted Answer

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

Question 4

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 by accounting for the difference between the two.

Question 5

Under FASAB standards, nonexchange revenues do NOT include

Accepted Answer

Nonexchange revenues are revenues where the government receives value without directly giving equal value in return. Sales to other government entities are considered exchange transactions because both parties receive and give up equal values, thus not fitting the definition of nonexchange revenues. Taxes, duties, fines, penalties, and donations do not require the government to provide direct value in return, fitting the nonexchange revenue category.

Question 6

Which of the following is NOT a basic financial statement for a federal agency?

Accepted Answer

The Statement of Stewardship Assets is not considered a basic financial statement for a federal agency. Basic financial statements typically include the Balance Sheet, Statement of Budgetary Resources, and Statement of Financing, among others, focusing on financial position, budgetary resources, and financing activities. The concept of stewardship assets pertains to the federal government's responsibility to manage and protect assets that are entrusted to its care, but it does not constitute a basic financial statement in the same manner as the others listed.

Question 7

The International Public Sector Accounting Standards Board has issued standards calling for which of the following?

Accepted Answer

The answer of The International Public Sector Accounting Standards Board...

Question 8

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

Accepted Answer

Assets such as weapons systems and space exploration equipment are considered capital assets under FASAB standards because they provide service potential or future economic benefits controlled by a federal entity.

Question 9

Which of the following is a NOT a true statement with regard to accounting and reporting for federal government agencies versus accounting and reporting for state and local governments?

Accepted Answer

The answer of Which of the following is a NOT...

Question 10

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

Accepted Answer

Benefits due to social security beneficiaries should be recorded as a liability when they become due and payable, reflecting the point at which the obligation to pay is established.

Question 11

The FASAB requires that federal government agencies accrue nonexchange revenues when a specifically identifiable, legally enforceable claim to resources arises, to the extent that collection is probable and the amount is measurable. Thus, fines and penalties should be accrued

Accepted Answer

The FASAB's criteria for accruing nonexchange revenues are met in all the given scenarios: upon the expiration of the contest period (A), when the offender pays the fine before a court date (B), and when the court imposes a fine (C). Each scenario represents a point at which a legally enforceable claim to resources arises, collection is probable, and the amount is measurable.

Question 12

Which of the following is NOT one of the basic government-wide federal financial statements?

Accepted Answer

The Statement of Custodial Assets is not one of the basic government-wide federal financial statements. The primary financial statements for federal reporting include the Balance Sheet, Statement of Operations and Changes in Net Position, and Statement of Net Cost.

Question 13

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 14

Which of the following is NOT a main section of the Financial Report of the United States Government?

Accepted Answer

The Financial Report of the United States Government typically includes the Introductory section with a letter of transmittal and Management's Discussion and Analysis (MD&A), Other Stewardship Information, and Required Supplemental Information sections. The Statistical section is not a main section of this report; it is more commonly found in comprehensive annual financial reports (CAFR) of state and local governments.

Question 15

Which of the following statements is true of the International Public Sector Accounting Standards Board?

Accepted Answer

The International Public Sector Accounting Standards Board (IPSASB) works towards the improvement and harmonization of public sector accounting standards worldwide. It has acknowledged that the Governmental Accounting Standards Board (GASB) standards, which are used primarily in the United States, are broadly consistent with its own standards, reflecting a mutual interest in high-quality financial reporting.

Question 16

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

Accepted Answer

The Federal Accounting Standards Advisory Board (FASAB) allows entities to value inventories held for sale using various methods, including historical cost (using FIFO or weighted average) and latest acquisition cost. This flexibility accommodates different accounting practices and inventory management strategies.

Question 17

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 18

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 19

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 20

Under FASAB standards, government agencies should recognize liabilities for grants

Accepted Answer

Under FASAB standards, government agencies recognize liabilities for grants when payments are due, as this is when the government has a present obligation to make a payment.

Quiz 16: Federal Government Accounting