Deck 12: Federal Government Accounting and Reporting

Question 1

Historically, three entities have had oversight responsibilities for financial management,
including budgeting, accounting and financial reporting, within the federal government: the Office
of Management and Budget (OMB) and the Department of the Treasury (Treasury) in the executive
branch, and the Government Accountability Office (GAO) in the legislative branch.

Answer 1

True

Question 2

The FASAB publishes the U.S. Standard General Ledger, the government's chart of accounts that defines the accounts and describes the journal entries needed by all governmental agencies to record their budgetary and financial transactions.

Answer 2

False

Question 3

Budgetary accounting is incorporated into day-to-day federal accounting operations.

Answer 3

True

Question 4

A commitment is incurred when an agency places an order, signs a contract, awards a grant, purchases a service, or takes other actions that require the government to make payments to the public or from one government account to another.

Question 5

Required financial statements for the United States Government include a statement of net cost, a statement of operations and changes in net position, a statement of changes in cash balances from unified budget and other activities, and a governmental-type fund balance sheet.

Question 6

The general fund is used to carry out the general purposes of the federal government, rather than being restricted by law to a specific program.

Question 7

The statement of net cost for the federal government is prepared in the same format as the government-wide statement of activities prepared by state and local governments.

Question 8

The statement of operations and changes in net position shows all revenues, expenses, and changes in net position, with activities financed from dedicated collections separated from those financed from other funds.

Question 9

For the fiscal year ended September 30, 2016, the Government Accountability Office expressed an unqualified opinion on the consolidated financial statements of the federal government as a whole.

Question 10

Federal agencies may choose to prepare an annual consolidated Performance and Accountability Report or a separate Agency Financial Report and an Annual Performance Report.

Question 11

The FASAB has established three categories of property, plant, and equipment: general property, plant, and equipment, heritage assets, and stewardship land.

Question 12

Heritage assets and stewardship land should be capitalized at acquisition cost (or estimated acquisition cost) in the federal government's balance sheet.

Question 13

Liabilities for social insurance programs, such as Social Security, are recognized in the federal government's balance sheet similar to the reporting for pension plans-that is, the liability is the unfunded present value of amounts due in the future to current Social Security beneficiaries and for benefits earned to date by active participants.

Question 14

Obligations are recorded in budgetary accounts, but not in proprietary accounts.

Question 15

In budgetary accounting, entries are made to record the expending of appropriations when supplies are consumed.

Question 16

In proprietary accounting, an expense may be charged in the current period even though the appropriation that funded the expense was charged in a previous period.

Question 17

The financial report for a federal agency may include a statement of social insurance and statement of changes in social insurance.

Question 18

The Social Security Board of Trustees estimates that the investments that are held to pay Social Security benefits will be depleted by 2034.

Question 19

Which of the following entities provides central payment services for the federal government's program agencies, operates the collection and deposit systems, and provides government-wide accounting and reporting services?

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

Question 20

Which of the following is not considered a fund from dedicated collections?

A) Trust fund
B) Public enterprise revolving fund
C) Special fund
D) General fund

Question 21

The GAO has not expressed an auditor's opinion on the consolidated financial statements for the federal government as a whole. Which of the following is not a reason that GAO has given for not expressing an opinion?

A) Serious financial management problems at the Department of Defense that have prevented its financial statements from being auditable.
B) The federal government's inability to adequately account for and reconcile intragovernmental activity and balances between federal entities.
C) A lack of internal controls across many departments and agencies of the federal government.
D) The federal government's ineffective process for preparing the consolidated financial statements.

Question 22

Which of the following accounts reports the largest liability on the federal government's balance sheet as of September 30, 2016?

A) Federal debt securities held by the public and accrued interest
B) Accounts payable
C) Environmental and disposal liabilities
D) Federal employee and veteran benefits payable E) Social security payable

Question 23

How are heritage assets reported in the federal government's balance sheet?

A) As part of General PP&E without being netted for accumulated depreciation
B) On a separate line entitled Heritage Assets and Stewardship Land
C) As part of General PP&E, net of accumulated depreciation
D) Not reported in the federal government's balance sheet

Question 24

How are liabilities arising from exchange transactions recognized in the federal government's financial statements?

A) When an amount becomes due and payable.
B) When the liability matures.
C) On the accrual basis when the exchange occurs.
D) On the modified accrual basis for all liabilities except Social Security and Medicare.

Question 25

The federal government recognizes a liability under the Medicaid program when:

A) The federal government collects payroll taxes.
B) A liability is normally recognized on the accrual basis of accounting for an exchange transaction.
C) Unpaid amounts exist at the reporting date.
D) Cash is disbursed to pay benefits.

Question 26

Federal agencies that participate in defined benefit pension plans for their federal employees should recognize an expense:

A) When the benefits are due and payable on the modified accrual basis of accounting.
B) Equal to the service cost for their employees for the accounting period less the amount contributed to the plan by the employees.
C) When cash is paid to retirees.
D) Equal to the actuarial present value of benefits earned by the employees during the current period and a portion expected to be earned by employees in the future until their retirement date.

Question 27

The Congress makes and the president approves a $400,000 appropriation for an agency. What budgetary journal entry should the agency make?
a.
$\begin{array}{lcc}\text { Apportionments } & 400,000 & \\\text { Allotments-realized resources }&&400,000\end{array}$

b.
$\begin{array}{lcc}\text { Fund balments-realized resources } & 400,000 \\\text { Unexpended appropriations-appropriations received } & &400,000 \\\end{array}$

c.
$\begin{array}{lcc}\text { Other appropriations realized } & 400,000 \\\text { Unappropriated authority }& & 400,000 \\\end{array}$

d.
$\begin{array}{lcc}\text {Unappropriated authority }&400,000 \\\text { Other appropriations realized } & &400,000\end{array}$

Question 28

The Congress makes and the president approves a $400,000 appropriation for an agency. What proprietary journal entry should the agency make?
a.
$\begin{array}{lcc}\text { Apportionments } & 400,000 & \\\text { Allotments-realized resources }&&400,000\end{array}$

b.
$\begin{array}{lcc}\text {Fund balance with Treasury } & 400,000 \\\text { Unexpended appropriations-appropriations received } & &400,000 \\\end{array}$

c.
$\begin{array}{lcc}\text { Allotments-realized resources } & 400,000 \\\text { Apportionments }& & 400,000 \\\end{array}$

d.
$\begin{array}{lcc}\text {Unexpended appropriations - appropriations received}&400,000 \\\text {Fund balance with Treasury } & &400,000\end{array}$

Question 29

An agency of the federal government issues a purchase order for $68,000 for the purchase of materials. The agency uses commitment accounting and originally believed that the materials would cost $65,000. What budgetary journal entry should the agency make when it issues the purchase order?
a.
$\begin{array}{lr}\text { Commitments } & 65,000 \\\text { Allotments-realized resources } & 3,000 \\\quad \text { Undelivered orders-obligations, unpaid } && 68,000 \\\end{array}$

b.
$\begin{array}{lr}\text { Commitments } &68,000 \\\quad \text { Undelivered orders-obligations, unpaid } & 68,000 \\\end{array}$

c.
$\begin{array}{lr}\text { Allotments-realized resources } &68,000 \\\quad \text { Undelivered orders-obligations, unpaid } & &68,000 \\\end{array}$

d.
$\begin{array}{lr}\text { Allotments-realized resources } & 65,000 \\\text { Commitments } &3,000\\\text { Undelivered orders-obliqations, paid }&&68,000\end{array}$

Question 30

A federal agency uses $28,000 of materials that had been previously purchased. What is the debit side of the proprietary journal entry?

A) Debit Operating materials and supplies held for use for $28,000
B) Debit Delivered orders-obligations, paid for $28,000
C) Debit Program costs-materials for $28,000
D) No entry is needed because materials are expensed when purchased in federal government accounting.

Question 31

An agency makes a disbursement request to Treasury for salary checks in the amount of $40,000. What budgetary journal entry should the agency make?
a.
$\begin{array}{ll}\text { Apportionments } & 40,000 \\\quad \text { Allotments-realized resources } & & 40,000 \\\end{array}$

b.
$\begin{array}{ll}\text { Allotments-realized resources } & 40,000 \\\quad \text { Delivered orders-obligations, unpaid } & & 40,000\\\end{array}$

c.
$\begin{array}{ll}\text { Allotments-realized resources } & 40,000 \\\quad \text { Commitments } & & 40,000 \\\end{array}$

d.
$\begin{array}{ll}\text { Program costs-salaries } & 40,000 \\\quad \text { Expended appropriations } & & 40,000\end{array}$

Question 32

An agency makes a disbursement request to Treasury for salary checks in the amount of $40,000. What proprietary journal entry should the agency make?
a.
$\begin{array}{ll}\text { Program costs-salaries } & 40,000 \\\quad \text { Expended appropriations } && 40,000 \\\end{array}$

b.
$\begin{array}{ll}\text { Allotments-realized resources } & 40,000 \\\quad \text { Delivered orders-obligations, unpaid } & & 40,000\\\end{array}$

c.
$\begin{array}{ll}\text { Allotments-realized resources } & 40,000 \\\quad \text { Commitments } && 40,000 \\\end{array}$

d.
$\begin{array}{ll}\text { Program costs-salaries } & 40,000 \\\quad \text { Disbursement in transit } && 40,000\end{array}$

Question 33

An agency has unpaid salaries at its fiscal year-end. Resources have been budgeted for these salaries. What proprietary journal entry should the agency make?
a.
$\begin{array}{ll}\text { Program costs-salaries } & 68,000 \\\quad \text { Accrued funded payroll } & & 68,000\\\end{array}$

b.
$\begin{array}{ll}\text { Program costs-salaries } & 68,000 \\\quad \text { Delivered orders-obligations, unpaid } && 68,000 \\\end{array}$

c.
$\begin{array}{ll}\text { Allotments-realized resources } & 68,000 \\\quad \text { Delivered orders-obligations, unpaid } && 68,000\\\end{array}$

d.
$\begin{array}{ll}\text { Program costs-salaries } & 68,000\\\text { Disbursement in transit } && 68,000 \end{array}$

Question 34

An agency acquires equipment costing $300,000 on the first day of its fiscal year. The equipment has a five-year estimated useful life. What proprietary journal entry should the agency make?
a.
$\begin{array}{ll}\text { Program costs-depreciation } & 120,000 \\\text { Accumulated depreciation } && 120,000 \\\end{array}$

b.
$\begin{array}{ll}\text { Depreciation expense } & 60,000 \\\quad \text { Accumulated depreciation } && 60,000 \\\end{array}$

c.
$\begin{array}{ll}\text { Expenditures-depreciation } & 60,000 \\\text { Accumulated depreciation } & & 60,000\\\end{array}$

d.
$\begin{array}{ll}\text { Program costs-deprecation } & 60,000 \\\text { Accumulated depreciation } && 60,000\end{array}$

e. None of the above

Question 35

The Social Security Board of Trustees projects that total Trust Fund revenues (including investment income) will continue to exceed program costs through 2021, but that Social Security will need to start redeeming its investments in Treasury securities in 2022. In which year, does the Social Security Board of Trustees estimated that its investments will be depleted?

A) 2023
B) 2030
C) 2034
D) 2040

Question 36

Match the entity that takes the action with the nature of the action taken.

-Congress

A) Allots
B) Appropriates
C) Obligates
D) Apportions
E) Disburses

Question 37

Match the entity that takes the action with the nature of the action taken.

-Office of Management and Budget

A) Allots
B) Appropriates
C) Obligates
D) Apportions
E) Disburses

Question 38

Match the entity that takes the action with the nature of the action taken.

-Treasury

A) Allots
B) Appropriates
C) Obligates
D) Apportions
E) Disburses

Question 39

Match the entity that takes the action with the nature of the action taken.

-Department

A) Allots
B) Appropriates
C) Obligates
D) Apportions
E) Disburses

Question 40

Match the entity that takes the action with the nature of the action taken.

-Agency

A) Allots
B) Appropriates
C) Obligates
D) Apportions
E) Disburses

Question 41

Match the account name with description of the action taken.

-Program costs--materials

A)Agency told Treasury made payment
B)Appropriation made to an agency
C)Schedule sent to Treasury requesting payment
D)Purchase order issued for materials
E)Agency uses supplies in operations

Question 42

Match the account name with description of the action taken.

-Disbursements in transit

A)Agency told Treasury made payment
B)Appropriation made to an agency
C)Schedule sent to Treasury requesting payment
D)Purchase order issued for materials
E)Agency uses supplies in operations

Question 43

Match the account name with description of the action taken.

-Fund balance with Treasury

A)Agency told Treasury made payment
B)Appropriation made to an agency
C)Schedule sent to Treasury requesting payment
D)Purchase order issued for materials
E)Agency uses supplies in operations

Question 44

Match the account name with description of the action taken.

-Other appropriations realized

A)Agency told Treasury made payment
B)Appropriation made to an agency
C)Schedule sent to Treasury requesting payment
D)Purchase order issued for materials
E)Agency uses supplies in operations

Question 45

Match the account name with description of the action taken.

-Undelivered orders-obligations, unpaid

A)Agency told Treasury made payment
B)Appropriation made to an agency
C)Schedule sent to Treasury requesting payment
D)Purchase order issued for materials
E)Agency uses supplies in operations

Question 46

Congress makes and the president approves appropriations for an agency in the amount of $380,000. Prepare the budgetary journal entry and the proprietary journal entry to record the appropriation.

Question 47

An agency of the federal government uses commitment accounting. It previously had committed $100,000 for the purchase of materials. A purchase order is issued for the materials in the amount of $98,000. Prepare the budgetary journal entry that is necessary when the purchase order is issued.

Question 48

An agency of the federal government previously issued a purchase order for materials in the amount of $98,000. Prepare the budgetary journal entry and proprietary journal entries that are necessary when the materials along with an invoice for $98,000 are received and accepted.

Question 49

An agency of the federal government previously received materials along with an invoice for $98,000. The agency prepares a disbursement schedule, which it sends to Treasury to request payment of the $98,000 Prepare the proprietary journal entry that is necessary when the disbursement schedule is sent to the Treasury.

Question 50

An agency of the federal government previously prepared a disbursement schedule, which it sends to Treasury to request payment of $98,000 for materials. The Treasury notifies the agency that payment has been made. Prepare the budgetary journal entry and proprietary journal entry that is necessary when the Treasury notifies the agency that the requested payment has been made.

Question 51

An agency of the federal government uses $60,000 of materials previously purchased. Prepare the proprietary journal entry that is necessary to record the use of materials in its operations.

Question 52

The Federal Bureau of Building Construction (BBC) receives an annual appropriation to perform construction activities. BBC does not use commitment accounting; instead, it obligates funds upon the award of contracts.
Prepare budgetary and proprietary journal entries to record the following transactions:
a. BBC received an appropriation of $2,000,000.
b. The Office of Management and Budget apportioned $500,000 of the appropriation to the Department of Domestic Construction, which oversees the BBC.
c. The Department allotted the entire $500,000 apportionment to the BBC.
d. BBC awarded a building construction contract for $300,000.
e. The contractor completed construction of the building. Because of a change order, however, the total cost of the work was $324,000. BBC accepted the work and recorded the asset and the invoice for $324,000.
f. BBC sent a disbursement schedule to the Treasury requesting payment of the $324,000.
g. Treasury notified BBC that payment was made to the contractor for $324,000.
h. At year-end, BBC recorded six months' depreciation ($16,200) on the building

Question 53

The Federal Bureau of Nutrition Standards (BNS), a unit of the Health Department, is responsible for establishing standards for the quality and nutritional content of packaged food products.
Prepare budgetary and proprietary entries to record the following transactions for the month of October 2020. (BNS does not use commitment accounting.)
a. BNS received an appropriation in the amount of $900,000.
b. The Office of Management and Budget apportioned the entire appropriation.
c. The Health Department made the first quarter's allotment of $225,000 to BNS.
d. BNS placed a purchase order for $14,000 for testing supplies.
e. All the supplies arrived in good order. The vendor submitted an invoice for $15,000 because additional supplies were shipped. (The purchase order permitted a 10 percent delivery overrun.) The invoice was accepted by BNS, and the supplies were placed in inventory.
f. BNS sent a disbursement schedule to Treasury, requesting payment of the $15,000 invoice.
g. Treasury notified BNS that the $15,000 invoice was paid.
h. BNS used $6,000 of the supplies acquired in transaction e. (BNS charges all expenses to the account "Inspection program costs.")
i. BNS sent a disbursement schedule to Treasury, requesting salary checks in the amount of $100,000.
j. Treasury sent salary checks to BNS in the amount of $100,000 for payment to BNS employees.
k. BNS made adjusting journal entries to accrue salary expenses in the amount of $8,000, so it could prepare month-end financial statements.