Question 1

Popular budgeting approaches employed by governments include incremental budgeting,performance budgeting,program budgeting,planning-programming-budgeting systems,and zero-based budgeting.

Accepted Answer

This statement is true.

Question 2

A major advantage of activity-based costing (ABC)is that it reduces unit cost distortions arising from overhead allocations that often occur using traditional cost accounting systems.

Accepted Answer

This statement is true. ABC assigns costs to products or services more accurately by identifying the specific activities that drive costs and then allocating those costs to the products or services based on their consumption of those activities. This reduces the potential for inaccuracies and cost distortions that can occur when traditional cost accounting systems rely on broad overhead allocations that may not be directly related to the products or services being produced.

Question 3

Public hearings must be held to provide adequate opportunity for citizens' input to governmental budgets,prior to legislative adoption of the budget.

Accepted Answer

Public hearings are a key component of participatory budgeting, providing an opportunity for citizens to provide input and feedback on the budget before it is adopted by the government. This helps to promote transparency and accountability in the budgeting process.

Question 4

Under service efforts and accomplishments (SEA)reporting,outcome measures gauge accomplishments,or the results of services provided,such as the percentage of lane-miles of road in excellent,good,or fair condition.

Accepted Answer

Outcome measures are used to gauge accomplishments or results of services provided. The example given of measuring the percentage of lane-miles of road in different conditions is an example of an outcome measure.

Question 5

When planning,budgeting,and performance measurement are related,good performance is rewarded,and consequences exist for substandard performance,then public employees' behaviors will change.

Accepted Answer

When there is a clear link between planning, budgeting, and performance measurement, and when there are rewards for good performance and consequences for substandard performance, public employees are more likely to change their behavior in order to achieve better outcomes. This is because they are motivated by the possibility of rewards and afraid of the consequences of poor performance. Therefore, the statement is true.

Question 6

Budget appropriations for governmental funds ordinarily cover only one year,while capital budgets are often multi-year.

Accepted Answer

Budget appropriations for governmental funds are usually approved on an annual basis and cover the operations and maintenance expenses for one fiscal year. On the other hand, capital budgets are often multi-year and cover long-term projects and investments in infrastructure and equipment.

Question 7

Under GASB standards,every government,regardless of its size,is instructed to prepare a cash budget for each month of the fiscal year.

Accepted Answer

Under GASB standards, every government, regardless of its size, is instructed to prepare a budget that includes both operating statements and cash flows. However, the budget may be prepared on an annual or biennial basis, depending on the government's size and complexity. Monthly cash budgets may be required for larger governments or those with more complex financial operations.

Question 8

In governments,the budget has always played a role in external financial reports through the required budget-to-actual comparison schedules or statements for those funds that have a legally approved budget.

Accepted Answer

The statement is true. In governments, budget-to-actual comparison schedules or statements are required for funds that have a legally approved budget, which are part of external financial reports.

Question 9

The sole purpose of preparing a governmental budget is to show compliance with laws and regulations.

Accepted Answer

The purpose of preparing a governmental budget is to allocate resources and prioritize spending in order to achieve goals and meet the needs of the community, not just to show compliance with laws and regulations. However, budgeting does involve ensuring that expenditures are in accordance with laws and regulations.

Question 10

Service efforts and accomplishments (SEA)reporting helps citizens,elected officials,appointed officials,investors and creditors,and other interested parties evaluate the government's performance in the absence of a "bottom line" measure such as exists for for-profit entities.

Accepted Answer

SEA reporting provides a comprehensive overview of the government's service efforts and accomplishments, which can be used to evaluate its performance and accountability. This type of reporting is essential for assessing the value and impact of public services and programs, as well as identifying areas for improvement and potential cost savings. Unlike for-profit entities, governments do not have a single bottom line measure such as profit or revenue; therefore, SEA reporting is critical for measuring and reporting on their overall performance.

Question 11

Under service efforts and accomplishments (SEA)reporting input measures are quantity measures that reflect the quantity of a service provided,such as the number of lane-miles of road repaired.

Accepted Answer

The answer of Under service efforts and accomplishments (SEA)reporting input...

Question 12

Despite its initial popularity,service efforts and accomplishments reporting has lost favor in recent years.

Accepted Answer

The answer of Despite its initial popularity,service efforts and accomplishments...

Question 13

Cash planning and budgeting are important in government because the timing of cash inflows often do not necessarily coincide with the timing of cash outflows.

Accepted Answer

Cash planning and budgeting are essential in government because the government often receives cash inflows at different times from when they are required to make cash outflows. Therefore, proper cash planning and budgeting ensure that the government has enough cash to meet its obligations and that cash is effectively managed.

Question 14

The type of budgeting that relates input of resources to output of services is zero-based budgeting.

Accepted Answer

Zero-based budgeting starts from a "zero base," with every function within an organization being analyzed for its needs and costs. It does not directly relate the input of resources to the output of services; instead, it requires all expenses to be justified for each new period. Performance-based budgeting, not zero-based budgeting, typically relates the input of resources to the output of services.

Question 15

Budgeting is an important part of a manager's planning and control responsibilities in both public and private organizations.

Accepted Answer

Budgeting helps managers to plan and allocate financial resources effectively, track progress, and make necessary adjustments to achieve organizational goals.

Question 16

Service efforts and accomplishments measures suffer from the same problem as line-item or object-of-expenditures budgeting; that is,focusing only on resource inputs while ignoring outputs and outcomes of governmental activities.

Accepted Answer

Service efforts and accomplishments measures focus on the outputs and outcomes of governmental activities, rather than just the resources inputted, which is the main issue with line-item or object-of-expenditures budgeting.

Question 17

Governmental budgets must be voted upon by citizens for approval in an annual general election.

Accepted Answer

Governmental budgets are typically approved by elected officials, such as city council members or members of parliament. While citizens may provide input or feedback through public hearings or other channels, they typically do not vote directly on the budget during an election.

Question 18

Total quality management (TQM)seeks to continuously improve an organization's ability to meet or exceed customers' demands,and,as such,is useful in a government setting as well as a business setting.

Accepted Answer

Total quality management (TQM) can be applied to any organization, including government agencies, to improve their ability to meet or exceed customer demands. Thus, the statement is true.

Question 19

To determine which costs are allowable for charging to a federal assistance program,accountants and auditors refer to the GASB cost circular.

Accepted Answer

The GASB (Governmental Accounting Standards Board) sets accounting and financial reporting standards for state and local governments in the United States, but it does not determine which costs are allowable for charging to federal assistance programs. Instead, this is determined by the federal government's Office of Management and Budget (OMB) through its Uniform Guidance (2 CFR Part 200).

Question 20

A major disadvantage of activity-based costing (ABC)in a governmental setting is the very limited number of activities for which it can be used.

Accepted Answer

The statement is not true. ABC can be used in a governmental setting for a wide range of activities, including programmatic activities, support activities, and administrative activities. However, there may be challenges in identifying and defining the activities and cost drivers, which may limit the practical application of ABC in some governmental organizations.

Quiz 12: Budgeting and Performance Measurement