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CGFM Exam 2 - Section 1 with
Accurate Solutions
"Statement" of accounting standard - ANS-Final document issued by board. Sets forth accounting and reporting standard that should be followed along with date it becomes effective
- Amount of specifically identified receivables that are not likely to be collected.
- Percent of receivables method
- Percent of revenues method - ANS-Three methods used to determine allowance for doubtful accounts
- Assign direct costs for cost objective 2. Assign indirect costs on cause and effect basis 3. Assign remaining costs on equitable and consistent basis - ANS-Preferred method of determining full costs for each objective (basic cost accounting rule)
- Define and accumulate outputs if feasible, quantify each type of output in units.
- Accumulate costs and quantitative units of resources consumed in producing outputs
- Assign costs to outputs and calculate cost per unit of each type of output - ANS-What should be done for each responsibility segments
- Each reporting entity should accumulate and report costs of its activities on a regular basis for management info purposes.
- Management of each reporting entity should define and establish responsibility segments
- All reporting entities should report the full costs of outputs in GPFR
- Inter-entity costs
- Costs of resources consumed by responsibility segments should be accumulated by type of resource such as employees, materials, capital, utilities, etc - ANS-Five requirements of SFFAS 4 10th Amendment - Reserve Clause - ANS-Establishes two levels of gov - federal and state based on delegation of powers Accountability - ANS-Cornerstone of financial reporting Accountbaility - ANS-Overall goal listed in GASB Concept Statement No 1 Accrual Modified accrual Cash - ANS-Three bases of accounting
Accrual - ANS-System of accounting used by business type activities Accrual - ANS-System of accounting used by fiduciary activities Accrual - ANS-What basis of accounting consumes capital assets over useful life Accrual accounting - ANS-Attempts to match inflows and outflows to the proper period Activity based costing - ANS-Focuses on activities of a production cycle, based on premise that an output requires activities to produce and activities consume resources Admission to parks, tolls, water, electricity - ANS-Examples of exchange transactions After appropriation is signed into law - ANS-When can agencies obligate and spend money AGAs Citizen Centric Report - ANS-Example of summary/popular report All eligibility requirements have been met - ANS-When does grant recipient recognize revenue Amount can be determined - ANS-What does measurable mean under modified accrual basis Appropriation - ANS-Legal document that sets spending limits Assess accountability and help make social, economic, and political decisions - ANS- How do financial reports assist users Assessment of governmental program performance and evaluation of relevance of priorities for delivery of services - ANS-Objectives achieved by monitoring budget Asset until it is consimed - ANS-How inventory is recorded (accrual) Asset until it is incurred - ANS-How prepaid expenses are recorded (accrual) Assets = liabilities + fund balance (or net position) - ANS-Balance sheet format accounting equation Assets when purchased or constructed, not as expenses. - ANS-How are capital assets recorded under economic resources measurement focus Balance sheet - ANS-Represents amounts as of end of the reporting period
Cash and claims to or against cash - ANS-Current financial resources primarily consist of what Category or source - ANS-Type of revenue generated Cause and effect basis - ANS-Used when impractical to use direct tracing. Based on premise that outputs require performance of certain activities, or use of certain resources to occur and that activities or resource use cause the results (results in the cost) Certificates of participation - ANS-Enable several persons to participate in lease- purchase Character - ANS-Fiscal period that expenditures are presumed to benefit Compensated absences and claims and judgements (do not require use of current financial resources) - ANS-Other major difference in measurement focuses involving long term obligations other than debt concept statement - ANS-Does not establish standards. Describes concepts the board will use as framework for evaluating existing standards and practices and for establishing new standards conference committee - ANS-What is formed to settle differences and agree on single budget Connected gov act - ANS-Federal websites are required to be mobile friendly Continuing resolution - ANS-Law passed when legislative body is unable to pass a budget prior to the start of the FY Control spending and ensure funds are available for entire year - ANS-Why are funds apportioned by quarter Cost accounting - ANS-Fed agencies required to incorporate what in the prep of financial statements Cost accounting - ANS-Major factor in establishment of user fees Cost allocation - ANS-Used when impractical or not economically feasible to assign costs directly or through use of cause and effect Cost assignment - ANS-Refers to process that identifies accumulated costs with reporting periods and cost objects
Cost drivers - ANS-What does activity based costing systems use to assign costs through activities to outpits Cost info - ANS-Govs rely on what info to monitor programs to ensure they are operating efficiently and effectively. Often used to help make allocation decisions among programs during budget process Cost objective - ANS-Could be location, function, activity, product, service, contract, or other work unit for which cost data are desired and for provision is made to accumulate and measure cost Cost objective, direct costs, indirect costs - ANS-Basic elements of cost accounting Costs of resources consumed by segment that directly or indirectly contribute to the output and costs of identifiable supporting services provided by other responsibility segments within reporting entity and by other reporting entities - ANS-Full cost of output produced by responsibility segments is sum of Current - ANS-Financial resources received prior to end of period are considered what Current financial resources - ANS-No impact on balance sheet from transaction involving capital assets and long term debt transactions (until payment is made) under which measurement focus Current financial resources - ANS-Transactions involving capital assets are reported as expenditures and long term debt is reported as other financing sources under which measurement focus current financial resources measurement focus - ANS-Emphasis on resources that can be used to provide goods/services during reporting period. current financial resources measurement focus - ANS-Measurement focus for governmental activities Current period - ANS-Current expenditures benefit DATA Act - ANS-Calls for OMB to offer recommendations to eliminate unnecessary duplication in financial reporting and reduce compliance costs, for recipients of fed awards DATA Act - ANS-Expand Fed Funding Accountability and Transparency Act. Establish gov wide data standards for financial data. USAspending.gov. Simplify reporting for entities receiving fed funds. Debt ceiling - ANS-Accountability mechanism that allows congress to monitor financial effects of spending and tax policies
Economic resources - ANS-Transactions involving capital assets and long term debt have no effect on operating statement under which measure focus Enactment of appropriation - ANS-Final step of budget process Enactment of budget - ANS-Primary responsibility of public officials involves Encompassing fund accounting and appropriation accounting - ANS-Two ways accounting systems provide fiscal accountability Encumbrance is reversed - ANS-What happens to encumbrance at state/local level once goods/services are received Ensure funds will be expended consistent with admin's priorities - ANS-Why would funds be apportioned by program or sub unit Equal to or less than useful life of associated capital equipment - ANS-When should bonds for capital projects mature Establish funds - ANS-Method to assure accountability for resources that have been raised Establish memo accounts for each budget appropriation and source of revenue - ANS- How do state and local govs prevent overspending the budget Executive branch - ANS-Accountable to legislative branch and the public Executive branch - ANS-Who initiates budget process Expected benefits exceed expected costs - ANS-Standards are only established when Expense on operating statement - ANS-How is interest on debt recorded (economic resources) Exposure Draft - ANS-Last due process document that must be published before final standard is issued. In format of final standard, but constituents have opportunity to react and provide comments. Expressed as simple as possible, include explanations and interpretations - ANS- Understandability of reports Federal financial accounting standards 4 - ANS-Contains five requirements aimed at providing reliable and timely info on full cost of fed programs, their activities, and outputs
Federal Financial Accounting Standards 4 - ANS-Managerial cost accounting standards and concepts issued by FASAB Financial (proprietary) accounting - ANS-What type of accounting is retrospective Financial position of entity (exchanged one asset, cash, for another asset, the capital asset) - ANS-What does purchase of capital asset under economic resources measurement focus affect Financial reporting - ANS-Primary communication device for assessing accountability Financial reporting - ANS-Primary mechanism to demonstrate accountability Financial reports - ANS-Shows how much was raised, how it was spent, and whether spending followed the budget Financing source - ANS-How does reviving entity report imputed value of goods/services Fiscal accountability - ANS-Associated with raising of resources and allocation of those resources accomplish objectives Fiscal accountability - ANS-Financial reporting at fund level is designed to demonstrate Fiscal accountability (focus on reporting flows and balances of current resources used to support gov activities rather than operating results and financial position) - ANS- Financial statements for gov operations financed by taxes and other generals revenues focus on what instead of operational accountability Fiscal and accounting entities - ANS-What are funds Five year period - ANS-How long is typical capital plan Fixed assets are capitalized and depreciated Debt proceeds are recorded as liabilities - ANS-Economic resources measurement focus uses these principles Function - ANS-Major gov service classifications (public safety, social services, public works, education, etc) Fund balance/net position - ANS-Difference between assets and liabilities Fund, org unit, function, program, category, line item/object class - ANS-Elements of budget document
Interperiod Equity - ANS-Current period taxpayer's are paying current period's services Interpretations, technical bulletins, technical releases - ANS-Issued y board to clarify points that may be ambiguous in previous standard Invitation to comment - ANS-Staff document. May contain elements of discussion memo, a preliminary views document, or both, but does not present any board views. Respondents could be asked to comment on research report, monograph, standards or proposed standard issued by another standard setting body Job order costing - ANS-Accumulates and assigns costs to discrete jobs Performance measures and performance reporting - ANS-Ways to address operational accountability Performance reports - ANS-Inform users how well gov is operating and whether it is achieving goals in effective/efficient manner Period reports (flow reports) - ANS-Covers entire FY (operating statement, cash flow statement) Point in time reports - ANS-Provides current info as of date of the report (balance sheet) Point in time reports and period reports - ANS-Two types of financial reports Preliminary Views - ANS-Board's initial proposal for accounting and reporting standard. May be single view which board is seeking input or there may be several views (majority view and minority view) Present and Future periods - ANS-Capital outlay benefits Probable that receivables recorded at financial statement date will not be collected and incollectible amount can be reasonably estimated - ANS-When should allowance for doubtful accounts be recorded Process costing - ANS-Accumulated costs by individual processing divisions Program - ANS-Group of activities within a function (tax enforcement, clean air, lunch program, traffic enforcement, street resurfacing, housing rehab, etc) Program budgeting - ANS-Considers proposed expenditures in relation to programs or services for which monies would be spent. Program level - ANS-Where associated performance measures are most likely to be presented
Raising resources and for determining how resources are to be used - ANS-Public officials are responsible for Reasonable and consistent - ANS-Costs should be allocated on what basis Receivavle - ANS-Recognized if payment has not been revived for exchange like transaction at the time the transaction takes place (accrual AND modified accrual) Recovery.gov - ANS-Catalyst in expanding access to disaggregated gov financial info Recovery.gov - ANS-Created to allow citizens to monitor progress in awarding funding intended to stimulate economy and create jobs Reported as expenses and liabilities when obligation is incurred - ANS-How compensated absences, claims, and judgements are recorded (economic resources) Reported in period when current financial resources are used - ANS-How compensated absences, claims, and judgements are reported (current financial resources) Reported in time frame that enables users to base decisions on it. Precise detail may be sacrificed - timely estimate more useful than precise amount - ANS-Timeliness of reports Reporting of revenues, capital assets, and long term obligations - ANS-Major difference between accrual and modified accrual Resources have already been revived or will be received sufficiently soon after end of FY in order to pay liabilities of current FY - ANS-What does available mean under modified accrual basis Responsibility segment - ANS-Responsible for carrying out mission, conducting major line of activity, or producing one or group of related products and services Results of operations - ANS-Financial reporting should provide info about Revenue bind - ANS-Payment is limited to revenue stream that backs the bond Revenue bond - ANS-Limited backing for bond holders Salaries and benefits, materials/supplies exclusively for cost objective, travel, wtc - ANS-Direct costs Lack of knowledge of connection between resources and result. Lack of cost accounting systems that could track resources dedicated to intended results.
Necessary and reasonable for proper and efficient performance and admin of fed awards. Be allocable to fed awards as provided in Uniform Guidance. Be authorized or not prohibited under state or local laws and regulations. Conform to any limitations or exclusions. Be consistent. Consistent treatment. Determined in accordance with GAAP. not included as cost or used to meet cost sharing or matching requirements of other fed award. Be net of all applicable credits. Be adequately documented. - ANS- Requirements for allowable costs of grant Net position (difference in assets and liabilities) reflects residual equity of gov, not amounts for distribution to stockholders. - ANS-Major difference in commercial model No - ANS-Does fed gov finance capital projects separately from operating activities Notes and bonds Intergovernmental grants Special assessments Current resources - ANS-Financing for capital projects Notes and bonds - ANS-What is most common method of financing capital projects Object class - ANS-Type of items purchased or services obtained Obligation - ANS-Formal reservation of budget authority that will result in future expenditure of funds from Treasury Obligation not reversed. Status of obligation changes from undelivered orders - unpaid to delivered orders - unpaid - ANS-What happens to obligation at fed level when goods/services are recieved OMB Circular A-122 - ANS-Cost Principles for Non-Profit Organizations OMB Circular A-21 - ANS-Cost for educational institutions OMB Circular A-87 - ANS-Cost principles for state, local, and Indian tribe to a Once accounting principle is used, it is presumed that future info is reported used same principle. If change is necessary, nature and reason of change should be disclosed as well as effect of change - ANS-Consistency of reports Only state and local govs - ANS-Who uses modified accrual accounting Only those who benefit from project pay for it - ANS-What is special assessment bond Open Gov Initiative - ANS-Effort by fed gov to create level of openness in gov
Operated statement. Results in an inflow of financial resources - ANS-Where is issuance of debt recorded (current financial resources) Operating in efficient and effective manners, collecting and using revenues - ANS-How is executive branch accountable to public Operating statement - ANS-Under economic resources measurement focus, purchase of capital asset does not impact what Operating statement. Not balance sheet since it involves consumption of financial resource - ANS-Where is investment in capital asset recorded (current financial resources) Operating statement. Requires use of financial resources - ANS-Where is repayment of debt (principle and interest) recorded (current financial resources) Operational accountability - ANS-Associated with stewardship of public resources. Public officials must ensure resources are used appropriately Org structure of the gov - ANS-What are expenditure budgets usually organized around Org unit - ANS-Dept, division, agency, bureau, board, commission, or other org unit that is responsible for carrying out gov operations Org units have no authority to continue operations and gov is shut down until authorization is passed to allow operations to resume - ANS-What happens if continuing resolution is not passed Over-obligating budget authority - ANS-Anti deficiency act violation Past, present, and future periods - ANS-Debt services benefit Payment is made - ANS-When is settle of claim recognized as expenditure (current financial resources) Percent of receivables method - ANS-Ending balance of receivables is multiplied by historical percentage of bad debts to arrive at amount to be estimated as accumulated bad debt Percent of revenues method - ANS-Total revenues for period are multiples by historical percentage of bad debts to arrive at amount to be considered in collectible for the period Performance accountability - ANS-Ensuring government act in efficient, effective, or economic manner
Total direct salaries, direct salaries and wages, another base which results in equitable distribution - ANS-Examples of equitable distribution base Understandability, reliability, relevance, timeliness, consistency, comparability - ANS- Characteristics of financial reports Unexpended balance - ANS-amount remaining for future spending User fees - ANS-Provide opportunity to link revenues to services that are actually delivered User fees - ANS-Used to supplement or replace general tax revenues Using resources in accordance with legislative mandates within fiscal constraints imposed by legislative branch - ANS-How is executive branch accountable to legislative branch Vacancy credit - ANS-Level of savings can result if position is eventually filled When due to the gov - ANS-When is tax/grant revenue reported (accrual) When earned - ANS-When are revenues reported with accrual accounting When earned - ANS-When is revenue reported (accrual) When eligibility requirements are met - ANS-When does grantor agency recognize liability/expenditure/expenses When fund liability is incurred (goods/services have been provided) - ANS-When are expenditure recognized (modified accrual) When gov has established legal claim - ANS-When is revenue recognized when there is no exchange When grant is awarded - ANS-When does grant recipient recognize revenue if there's no eligibility criteria When incurred - ANS-When are expenses reported with accrual accounting When incurred - ANS-When are expenses/liabilities reported (accrual) When payment is made - ANS-When are claims, judgements, compensated absences, etc recognized When priorities of executive branch are significantly different than legislative branch - ANS-When is use of veto most common
When reporting objective is to match revenues to expenses - ANS-When is economic resources measurement focus used When resources are available - ANS-When is revenue recognized for non exchange transaction (modified accrual) When they relate to business type activities - ANS-When should inter-entity costs be imputed When underlying transaction takes place - ANS-When is receivable and revenue recognized for non exchange transactions (accrual) Where all major functions benefit from indirect costs to approximately same degree - ANS-When can simplified method be used for allocation/computation of indirect cost Zero based budgeting - ANS-Each org unit begins with zero budget and must justify even continuation of existing programs Zero coupon bond - ANS-No payments for principle or interest until bonds are due
