Question 1

The "net position" of a federal agency may include all of the following components,except.

Accepted Answer

D

Question 2

Fund balances of a federal agency's various funds are reported in the fund equity section of the agency's balance sheet.

Accepted Answer

The fund balances (net assets) of the various funds are reported in the net position section of an agency's balance sheet.

Question 3

Federal government agencies prepare a management's discussion and analysis (MD&A)to be included in their general purpose federal financial report.

Accepted Answer

Statement of Federal Financial Accounting Concepts No. 3 requires an MD&A for federal agencies to be in compliance with federal GAAP.

Question 4

FASAB has identified four major user groups of federal financial reports,they are

Accepted Answer

The answer of FASAB has identified four major user groups...

Question 5

Cumulative results of operations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation,or which has been obligated but not yet expended.

Accepted Answer

OMB Circular A-136 requires that the components of net position be (1) unexpended appropriations, and (2) cumulative results of operations, the net difference between expenses/losses and financing sources, including appropriations, revenues, and gains, since the inception of the activity. Cumulative results of operations also includes any other items that would affect the net position, including, the fair value of donated assets and assets (net of liabilities) transferred to or from other federal entities without reimbursement.

Question 6

Beneficial investments of the federal government in items such as nonfederal physical property,human capital,and research and development on the financial statements are called heritage assets.

Accepted Answer

The term that describes beneficial investments of the federal government is stewardship investments.

Question 7

The federal budgetary term "commitment" is synonymous with "encumbrance" as used in state and local government terminology.

Accepted Answer

The federal budgetary term "commitment" means to reserve allotted budgetary authority in the amount of an order prior to the actual ordering of goods and services, whereas "encumbrance" in state and local government usage means an order has been placed. The additional "commitment" step is optional though recommended for federal agencies.

Question 8

Objectives that are identified by SFFAS No.1 for federal financial reporting include budgetary integrity,operating performance,transparency,but not stewardship.

Accepted Answer

SFFAS No. 1 includes budgetary integrity, operating performance, and stewardship, but not transparency.

Question 9

The three perspectives from which the federal government can be viewed are organizational,budget,and line-item.

Accepted Answer

SFFAS No. 2 "Entity and Display" describe the three perspectives from which the federal government can be viewed as organizational, budget, and program.

Question 10

The financial statements of the U.S.government are prepared using generally accepted accounting principles promulgated by the Governmental Accounting Standards Board.

Accepted Answer

Federal GAAP is promulgated by the Federal Accounting Standards Advisory Board.

Question 11

Which of the following federal officials is a "principal" of the Joint Financial Management Improvement Program who considers and approves or disapproves accounting and reporting standards recommended by the Federal Accounting Standards Advisory Board?

Accepted Answer

The Comptroller General, as head of the Government Accountability Office (GAO), is a "principal" of the Joint Financial Management Improvement Program (JFMIP) and has the authority to approve or disapprove accounting and reporting standards recommended by the Federal Accounting Standards Advisory Board (FASAB). The Chair of FASAB is responsible for leading the board in developing and recommending accounting standards, but does not have the authority to approve or disapprove them. The Secretary of the Interior and Director of the Congressional Budget Office are not directly involved in JFMIP or FASAB decision-making.

Question 12

The objectives of federal financial reporting are to assist report users in evaluating budgetary integrity,operating performance,stewardship,and adequacy of systems and controls.

Accepted Answer

These are the objectives identified in FASAB Statement of Accounting and Reporting Concepts No. 1, as discussed in Chapter 11.

Question 13

At the present time,the conceptual framework for the federal government and its agencies does not provide definitions of the basic elements of the financial statements.

Accepted Answer

Statement of Federal Financial Accounting Concepts No. 5 "Definitions of Elements and Basic Recognition Criteria for Accrual-Basis Financial Statements" is the most recent concepts statement at the time of publication of this edition of the text. SFFAC No. 5 does define assets, liabilities, net position, revenues, and expenses, as well as establish that in order to be recognized on the face of a financial statement, an item must meet the definition of an element and be measurable.

Question 14

Unexpended appropriations is the component of net position in a federal agency balance sheet that represents the amount of appropriations still available for obligation,or which has been obligated but not yet expended.

Accepted Answer

OMB Circular A-136 requires that the components of net position be (1) unexpended appropriations, the amount of the entity's appropriations represented by undelivered orders and unobligated balances, and (2) cumulative results of operations.

Question 15

Responsibility for setting accounting and reporting standards for federal agencies rests primarily with the Federal Accounting Standards Advisory Board.

Accepted Answer

Responsibility for setting accounting and reporting standards and for establishing and maintaining a sound financial management system for the federal government as a whole is vested in the three sponsors or "principals" of the FASAB: the Comptroller General, the Director of the Office of Management and Budget, and Secretary of the Treasury. While in most cases the recommendations of the FASAB are expected to be accepted by the foregoing three "principals," the recommendations are just that-recommendations.

Question 16

Federal government accounting standards require the measurement of expenses rather than expenditures.

Accepted Answer

While it is true that accounting standards for federal accounting require the measurement of expenses for assessing the cost of programs and activities, they also require the measurement of expenditures (although called expended appropriations) that are compared to appropriations for budgetary accounting purposes.

Question 17

Federal departments and agencies should utilize the U.S.Government Standard General Ledger as the account structure for their accounting systems.

Accepted Answer

Some federal departments and agencies were slow to adopt the Standard General Ledger; however, now it is expected to be in use by all agencies in order to ensure uniformity and standardization of financial information reported to central agencies of the U.S. Treasury Department.

Question 18

Which of the following is not an objective identified in FASAB Statement of Accounting and Reporting Concepts No.1?

Accepted Answer

FASAB Statement of Accounting and Reporting Concepts No.1 identifies objectives such as assisting report users in evaluating budgetary integrity, stewardship, and operating performance. However, it does not identify the objective of assisting report users in evaluating the extent to which tax burdens have changed.

Question 19

The Chief Financial Officer Act of 1990 establishes an office of federal financial management within the OMB,headed by a controller appointed by the President,establishes a chief financial officer position within each major federal department and agency,requires the development of a 5-year financial plan by OMB,and requires some federal agencies to provide audited financial statements.

Accepted Answer

These are the requirements mandated by the CFO Act, as described in Chapter 11 under the caption "Director of the Office of Management and Budget."

Question 20

Current FASAB standards distinguish intragovernmental assets from governmental assets and entity assets from nonentity assets.

Accepted Answer

Entity assets are combined with nonentity assets, although that was not the case in the past. Statement of Federal Financial Accounting Standards (SFFAS) No. 1 addresses these issues.

Quiz 11: Auditing of Governmental and Not-For-Profit Organizations