Deck 17: Accounting and Reporting for the Federal Government

Question 1

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

Answer 1

True
Explanation: 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 2

Heritage assets are defined as beneficial investments of the federal government in items such as nonfederal physical property,human capital,and research and development.

Answer 2

False
Explanation: The definition provided is for stewardship investments not heritage assets.

Question 3

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

Answer 3

True
Explanation: These are the objectives identified in FASAB Statement of Accounting and Reporting Concepts No. 1, as discussed in Chapter 17.

Question 4

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

A) To assist report users in evaluating budgetary integrity.
B) To assist report users in evaluating the extent to which tax burdens have changed.
C) To assist report users in evaluating stewardship.
D) To assist report users in evaluating operating performance.

Question 5

Under SFFAS No.2,all federal agencies are defined as separate reporting entities for financial statement preparation and reporting purposes.

Question 6

Objectives that are identified by SFFAS No.1 for federal financial reporting include budgetary integrity,operating performance,transparency,and stewardship.

Question 7

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

Question 8

Which of the following is not a part of the FASAB due process for establishing a federal financial accounting standard?

A) Public comment on a discussion memorandum.
B) Issuing an exposure draft.
C) Unanimous approval by the FASAB.
D) Support (or lack of opposition)of the standard by the three principals (Comptroller General,Secretary of the Treasury,and Director of the Office of Management and Budget).

Question 9

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

Question 10

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

Question 11

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

Question 12

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

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.

Question 14

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

A) Unexpended appropriations.
B) Cumulative results of operations.
C) Appropriations represented by undelivered orders and unobligated balances.
D) Fund balance with U.S.Treasury.

Question 15

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.

Question 16

By law,federal agencies must incorporate the accounting standards (GAAP)established for the federal government into their financial management systems.

Question 17

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

Question 18

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.

Question 19

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

A) Congress,executives,program managers,and citizens.
B) Congress,executives,citizens,and bond rating agencies.
C) Congress,program managers,foreign governments,and citizens.
D) Congress,program managers,bond rating agencies,and political parties.

Question 20

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

Question 21

Which of the following statements most accurately describes the dual-track accounting system used in federal agency accounting?

A) Recording internal budgetary transactions and proprietary transactions with external parties on a modified accrual basis of accounting.
B) Use of double-entry accounting.
C) Maintaining self-balancing sets of proprietary and budgetary accounts and recording the effects of transactions on both available budgetary resources and proprietary accounts.
D) Keeping separate books,one on a tax basis and the other on a GAAP basis.

Question 22

Which of the following financial statements is not required by OMB Circular A-136?

A) Statement of budgetary resources.
B) Statement of cash flows.
C) Balance sheet.
D) Statement of changes in net position.

Question 23

Which of the following is an accurate list of the three perspectives from which the federal government can be viewed,as described in SFFAS No.2 "Entity and Display?"

A) Function,department,and program.
B) Organization,budget,and program.
C) Budget,program,and line-item.
D) Fund,activity,and account.

Question 24

Which of the following accounts used in state and local government accounting is most like the federal budgetary account "Undelivered Orders"?

A) Reserve for Encumbrance.
B) Expenditures.
C) Appropriations.
D) Encumbrances.

Question 25

Explain the components of net position.

Question 26

A certain federal agency placed an order for office supplies at an estimated cost of $14,400.Later in the same fiscal year these supplies were received at an actual cost of $14,800.Assume commitment accounting is not used by this agency.When the order is placed the required journal entry (or entries)will affect the accounts shown in what net amounts?

A) Budgetary accounts: $14,400; Proprietary accounts: $14,400.
B) Budgetary accounts: $14,400; Proprietary accounts: $0.
C) Budgetary accounts: $14,400; Proprietary accounts: $14,800.
D) Budgetary accounts: $0; Proprietary accounts: $0.

Question 27

Which of the following statements is not true about the United States government-wide financial report?

A) Since 1997,the financial statements of the U.S.government as a whole have been audited by the GAO.
B) The majority of the 24 major federal agencies required to be audited have received unqualified audit opinions by the GAO.
C) The Comptroller General of the United States has rendered a disclaimer of opinion on the U.S.Government's consolidated financial statements for as long as that office has audited these statements.
D) The federal government received an unqualified opinion from the GAO on the most recent financial statements of the U.S.government as a whole.

Question 28

Explain the GAAP hierarchy used by federal government agencies.

Question 29

Which of the following federal financial statements relies primarily on the use of actuarial assumptions and long-range projections for the information reported on the statement?

A) Balance sheet.
B) Statement of social insurance.
C) Statement of custodial activity.
D) Statement of fiduciary net assets.

Question 30

The Comptroller General of the United States is the head of the:

A) Office of the Management and Budget.
B) Government Accountability Office.
C) Congressional Budget Office.
D) Federal Accounting Standards Advisory Board.

Question 31

Explain the "dual-track" accounting system used by federal agencies and why it is needed.

Question 32

"Each federal government agency should maintain a General Fund and as many other funds defined by the GASB as are appropriate." Do you agree? Why or why not?

Question 33

The management's discussion and analysis (MD&A)required in general purpose federal financial reporting is different than that required by GASB of state and local governments in that:

A) It includes information about the agency's performance goals and results in addition to financial activities.
B) It is outside the general purpose federal financial report and is optional,not required.
C) It is a part of the basic financial statements and,as a result,it is audited along with the financial statements.
D) There are no significant differences.

Question 34

Where would federal agencies report information concerning their performance goals and performance results,along with their future challenges?

A) Other accompanying information.
B) Required supplemental information.
C) Management discussion and analysis.
D) Notes to the financial statements.

Question 35

Which of the following officials has shared responsibility under federal law for establishing and maintaining a sound financial structure for the federal government?

A) Chief Financial Officer of the Congressional Budget Office.
B) Chair of the Governmental Accounting Standards Board.
C) Secretary of the Treasury.
D) Chair of the Federal Accounting Standards Advisory Board.

Question 36

One of the purposes of the Federal Financial Management Improvement Act of 1996 was to

A) Establish a requirement that the financial statements of the federal government as a whole be audited.
B) Improve the effectiveness of programs receiving federal funds.
C) Establish generally accepted federal accounting principles.
D) Rebuild the credibility and restore public confidence in the federal government.

Question 37

A certain federal agency placed an order for office supplies at an estimated cost of $14,400.Later in the same fiscal year these supplies were received at an actual cost of $14,800.Assume commitment accounting is not used by this agency.When the order is received the required journal entry (or entries)will affect the accounts shown in what net amounts?

A) Budgetary Accounts: $14,400; Proprietary Accounts: $14,400.
B) Budgetary Accounts: $14,400; Proprietary Accounts: $14,800.
C) Budgetary Accounts: $400; Proprietary Accounts: $14,800.
D) Budgetary Accounts: $0; Proprietary Accounts: $14,800.

Question 38

Which of the following describes the usual flow of budgetary authority through the budgetary accounts of a federal agency?

A) Apportionment,allotment,appropriation,commitment,obligation,expended appropriation.
B) Allotment,commitment,obligation,expended appropriation,apportionment.
C) Appropriation,apportionment,allotment,commitment,obligation,expended appropriation.
D) Commitment,obligation,appropriation,apportionment,allotment,expended appropriation.

Question 39

In federal government accounting,recording the estimated amount of equipment prior to actually placing an order or entering into a contract is called a(an)

A) Obligation.
B) Apportionment.
C) Commitment.
D) Allotment.

Question 40

Which of the following is required by OMB Circular A-136 in the basic financial statements?

A) Statement of changes in net position.
B) Statement of net assets.
C) Statement of revenues,expenditures,and changes in fund balances.
D) Statement of financing.

Question 41

Describe the budgetary accounts used in federal agency accounting and the flow of budgetary authority through those accounts.

Question 42

The Federal Monuments Commission began operations on October 1,2014.Show in general journal form all entries that should be made in budgetary and proprietary accounts of the agency to record the following events:
A.The Congress passed,and the President signed,a one-year appropriation for fiscal year 2015 for the Monuments Commission in the amount of $30,000,000.
B.The OMB notified the agency of the following apportionments of the 2015 appropriation: first quarter,$8,000,000; second quarter,$8,000,000; third quarter,$7,000,000; and fourth quarter,$7,000,000.
C.The Commission Director allotted $1,500,000 for the operations of October 2014.
D.Commitments for goods and services not yet ordered or received were recorded in the amount of $1,300,000.
E.Purchase orders and contracts for services were recorded for the month of October 2014 in the amount of $1,250,000.

Question 43

Explain the process of financial reporting of the U.S.Government as a whole.Does the federal government receive an unqualified audit opinion on its financial report?

Question 44

Describe accounting for federal social insurance programs.Comment on the adequacy of current accounting standards in this area.

Question 45

Describe the purpose of a management's discussion and analysis (MD&A)in the general purpose federal financial report of a federal agency.

Question 46

What is the difference between entity assets and nonentity assets?

Question 47

Identify the office,officer,or department of the United States federal government that is responsible for each of the following:

A)Appropriations.
B)Apportionments.
C)Allotments.
D)Obligations.

Question 48

The Desert Conservation Agency was authorized by the United States Congress to commence operations on October 1,2014.Record the following transactions in general journal form,as they should appear in the budgetary and proprietary accounts of the agency.For each entry indicate whether it affects the budgetary accounts or the proprietary accounts.
A.The agency received official notice that its one-year appropriation passed by the Congress and signed by the President amounted to $350 million for operating expenses for the fiscal year and $100 million for acquisition of capital assets during the year.
B.The Office of Management and Budget notified the agency that the entire appropriation had been apportioned.
C.The head of the agency allotted $75 million for the first quarter's operating expenses,and $25 million for equipment to be ordered during the first quarter.
D.Purchase orders and contracts for services recorded for the first quarter totaled $90 million (the agency does not record commitments prior to placing orders or entering into contracts).
E.Total expenditures for the first quarter amounted to $70 million for operating expenses and $18 million for equipment,for which an obligation in the amount of $84 million had been previously recorded (see item D above).The expenditures were all paid from fund balance with U.S.Treasury.

Question 49

What is a Performance and Accountability Report (PAR)? Describe its purpose and contents.