GOV Chapter 17 Quiz Latest 2021

Chapter 17

Federal Government Accounting

 TRUE/FALSE (CHAPTER 17)

1.            If the federal Treasury, GAO, or OMB objects to a FASAB standard, it is returned to the Board for reconsideration.

2.            Federal operations consist of 5 fund types—the general fund, special funds, trust funds, capital funds, and revolving funds.

3.            Proprietary accounts are used to report the business-type activities of the federal government.

4.            Stewardship assets are long-lived assets that are not given balance sheet recognition by the federal government.

5.            The federal agency balance sheet and statement of net cost are prepared on the full accrual basis of accounting.

6.            FASAB requires nonexchange revenues to reported on both the accrual and the cash basis of accounting.

7.            Federal social insurance liabilities (e.g. social security) to beneficiaries are recognized only when due.

8.            Federal agencies recognize the cost of debt guarantees when it is probable that borrowers will default on their payments.

9.            Military assets are required to be capitalized and depreciated until war is declared.

10.          At an international level, the IFAC Public Sectors Committee recommends preparation of cash-basis financial statements for third-world governments.

 

MULTIPLE CHOICE (CHAPTER 17)

1.            Which of the following is a unique characteristic of the federal government that necessitates special accounting and reporting practices?

a)            The types of its expenditures.

b)            The size of its obligations.

c)            The extent of its powers.

d)            The range of its influence.

2.            Which of the following is a function of the U.S. Department of Treasury?

a)            Adjudicating claims for and against the federal government.

b)            Monitoring the education of the federal budget.

c)            Overseeing the central accounting and reporting systems.

d)            Apportioning federal appropriations.

3.            Which of the following is a responsibility of the Office of Management and Budget?

a)            Assisting the President in preparing the federal budget.

b)            Resolving bid protests that challenge government contract awards.

c)            Keeping track of monetary assets and liabilities.

d)            Arranging for audits of federal agencies

4.            The amount of its budgeted resources that is currently available to be spent by a federal agency is its

a)            Appropriation.

b)            Apportionment.

c)            Cash balance.

d)            Unencumbered obligations.

5.            The CFO of the United States is

a)            a position within OMB.

b)            a position within GAO.

c)            a position in the U.S. Treasury Department.

d)            A cabinet position reporting to the U.S. President.

6.            When a federal agency must have an independent audit which of the following can perform that audit?

a)            OMB.

b)            The agency’s inspector general.

c)            GAO.

d)            The U.S. Treasury Department.

7.            The Government Accountability Office (GAO) is part of which branch of the federal government

a)            Executive branch.

b)            Judicial branch.

c)            Legislative branch.

d)            None of the above; it is independent of any other branch of government.

8.            Which of the following is a role that GAO plays in the accounting and information management policy of the United States?

a)            Prescribing standards for auditing and evaluating government programs.

b)            Developing integrated accounting systems that comply with applicable accounting standards.

c)            Apportioning federal appropriations.

d)            Reviewing federal agencies’ spending plans.

9.            Federal government accounting standards are the responsibility of which Federal government agency?

a)            The Department of the Treasury.

b)            The Office of Management and Budget.

c)            The Government Accountability Office.

d)            All of the above.

10.          The Federal Accounting Standards Advisory Board is responsible for

a)            Recommending federal accounting standards.

b)            Setting federal accounting standards.

c)            Implementing federal accounting standards.

d)            Developing federal auditing standards.

11.          Which of the following is a true statement about the Federal Accounting Standards Advisory Board?

a)            It is an independent standard setting board.

b)            It is a shared jurisdiction board created by joint agreement of three federal agencies.

c)            It is an executive office function.

d)            It was created by and reports to Congress.

12.          Which of the following categories is included in the Objectives of Federal Financial Reporting?

a)            Operating performance.

b)            Congressional performance.

c)            Executive performance.

d)            Accountability.

13.          Federal operations are accounted for in four types of funds. Which of the following is one of the types of funds used?

a)            Capital funds.

b)            Revolving funds.

c)            Special revenue funds.

d)            Fiduciary funds.

14.          Federal government capital expenditures can be accounted for in which of the federal funds?

a)            General fund

b)            Special funds.

c)            Trust funds.

d)            All of the above.

15.          Which of the following types of expenditures are not accounted for in the federal government general fund.

a)            Operating expenditures.

b)            Capital expenditures.

c)            Medicare.

d)            Interest on public debt.

16.          Which of the following is a false statement about federal special funds?

a)            They are maintained primarily to account for resources that are designated for specific programs or activities.

b)            They are typically financed by dedicated fees.

c)            They account for resources used to pay for national defense.

d)            Are included in the Unified federal budget.

17.          Which of the following is a true statement regarding which funds are included in the category federal trust funds?

a)            Old-Age and Survivors Insurance Fund (Social Security) are included.

b)            Supplementary Medical Insurance Fund (Medicare) is included.

c)            Neither (a) nor (b) are included.

d)            Both (a) and (b) are included.

18.          Federal government trust funds are

a)            Composed of funds restricted by the donor/contributor.

b)            Like endowment funds—only the income, not the principle, can be expended.

c)            Any funds designed by laws as trust funds.

d)            Composed of funds that by law are dedicated to certain activities or programs.

19.          Which of the following federal fund types is most similar to state or local government’s enterprise fund?

a)            General fund.

b)            Special funds.

c)            Trust funds.

d)            Revolving funds.

20.          The U.S. Postal Service is accounted for in which of the following fund types?

a)            General fund.

b)            Special fund.

c)            Trust fund.

d)            Revolving fund.

 

21.          The Unified Federal Budget was originally intended to include which of the following fund types?

a)            General fund, all special funds, all trust funds, and all revolving funds.

b)            General fund, all special funds, some trust funds, and all revolving funds.

c)            General fund, some special funds, some trust funds, and all revolving funds.

d)            General fund, all special funds, and all revolving funds.

22.          Which of the following federal government accounting terms is most similar to an encumbrance, as that term is used in state and local government accounting?

a)            Apportionment.

b)            Allotment.

c)            Commitment.

d)            Obligation.

23.          Which of the following federal government accounting terms is most similar to an appropriation, as that term is used in state and local government accounting?

a)            Apportionment.

b)            Allotment.

c)            Commitment.

d)            Obligation.

24.          Which of the following is NOT a criterion for a federal “component” to be considered a reporting entity?

a)            There is a management responsible for controlling and deploying the component’s outputs and outcomes and for executing its budget. It is held accountable for its performance.

b)            The component is of sufficient size and significance that its financial statements would provide a meaningful representation of its operations and financial condition.

c)            The component is of sufficient cohesiveness of operations that its financial statements would provide a meaningful representation of a specific program or type of activity.

d)            Users are interested in the information to be reported in its financial statements and could use it to make resource allocation and related decisions.

25.          The Financial Report of the U.S. Government is prepared on which of the following bases of accounting?

a)            Cash.

b)            Modified accrual.

c)            Budgetary.

d)            Accrual.

26.          The U.S. Government Annual Report is prepared on which of the following bases of accounting?

a)            Cash.

b)            Modified accrual.

c)            Budgetary.

d)            Accrual.

 

27.          Which of the following is NOT one of the basic financial statements for the federal government-at-large?

a)            Balance sheet.

b)            Statement of operations and changes in net position.

c)            Statement of net cost

d)            Statement of custodial assets.

28.          Which of the following is NOT a main section of the Financial Report of the U.S. Government?

a)            Introductory Section including letter of transmittal and MD&A.

b)            Stewardship Section.

c)            Supplemental Information Section.

d)            Statistical Section.

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

a)            Balance Sheet.

b)            Statement of Budgetary Resources.

c)            Statement of Financing.

d)            Statement of Stewardship Assets.

30.          The FASAB requires that federal government agencies recognize nonexchange revenue on which of the following bases of accounting?

a)            Cash.

b)            Modified accrual.

c)            Accrual.

d)            Both (a) and (c).

31.          If a federal agency should have collected $400 from a nonexchange revenue source, but it actually collected $430, the financial statements should reflect

a)            $400 cash collections plus $30 accrual adjustment.

b)            $430 total revenue.

c)            $430 cash collections less $30 accrual adjustment.

d)            $400 revenue.

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

a)            Stewardship assets such as national parks and national forests.

b)            Assets such as weapons systems and space exploration equipment.

c)            Heritage assets that have only historical, artistic, or cultural significance.

d)            Human capital.

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

a)            Historical cost, using FIFO.

b)            Historical cost, using weighted average.

c)            Latest acquisition cost.

d)            All of the above.

 

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

a)            Historical cost.

b)            Latest acquisition cost.

c)            Neither Historical cost nor latest acquisition cost.

d)            No value is assigned. Assets held for use are not included on the financial statements.

35.          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?

a)            Adjusts the latest acquisition cost inventory valuation to the historical cost valuation.

b)            Increases the cost of goods sold by the increase in market value of the inventory.

c)            Decreases the cost of goods sold by the increase in market value of the inventory.

d)            Adjusts the historical cost valuation to the latest acquisition cost inventory valuation.

36.          The federal government is required to recognize liabilities on nonexchange transactions

a)            When an exchange takes place.

b)            When the event occurs and the anticipated outflows of resources are both probable and measurable.

c)            When due.

d)            When formally acknowledged and an amount is due and payable as a result.

37.          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?

a)            When an exchange takes place.

b)            When the event occurs and the anticipated outflows of resources are both probable and measurable.

c)            When due.

d)            When formally acknowledged and an amount is due and payable as a result.

38.          Amounts due to social security beneficiaries should be “booked” (recorded as a liability)

a)            When an exchange takes place.

b)            When the event occurs and the anticipated outflows of resources are both probable and measurable.

c)            When due.

d)            When formally acknowledged and an amount is due and payable as a result.

39.          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?

a)            The face amount of the loan.

b)            The present value of the future principal and interest payments discounted at the stated rate.

c)            The present value of the future principal and interest payments discounted at the comparable Treasury rate.

d)            No asset should be recorded.

40.          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?

a)            The difference between the face value of the loan and the present value of the estimated net cash receipts.

b)            The difference between the present value of the estimated net cash receipts at the stated rate of interest and the present value of the cash receipts at the prevailing interest rates.

c)            The fair value of the loans.

d)            No expense is recognized.

41.          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?

a)            The face amount of the loan.

b)            The present value of the anticipated payments to the private lender discounted at the government agency’s rate.

c)            The present value of the anticipated payments to the private lender discounted at the lender’s rate.

d)            No liability should be recorded.

42.          The Government Performance and Results Act of 1993 requires federal agencies to do which of the following?

a)            Develop strategic plans and operational objectives.

b)            Develop measures of performance.

c)            Report on the extent to which they have met their objectives.

d)            All of the above.

43.          Which of the following differentiates the accounting and reporting for federal government agencies versus state and local governmental entities?

a)            State and local governments use accrual accounting in the proprietary and fiduciary funds as well as government- wide statements; federal agencies          use only the cash basis of accounting.

b)            State and local governments do not account for apportionments and most do not account for allotments.

c)            The federal government uses a dual-track method of accounting for proprietary accounts and budgetary accounts; state and local governments do not use budgetary accounting.

d)            The budget is recorded in the general ledger of a state or local government, but not in a federal agency.