CBS CBS Government & Public Sector Budgeting 1 — Questions and Answers
Question 1: Which basis of accounting is most commonly used in U.S. federal government budgeting?
- Full accrual basis
- Modified accrual basis
- Cash basis (Correct answer)
- Hybrid accrual basis
Correct answer: Cash basis
The U.S. federal budget is prepared on a cash (budget authority/outlays) basis, though agencies also produce accrual-based financial statements.
Question 2: The Government Accountability Office (GAO) is primarily responsible for:
- Setting federal tax rates
- Conducting audits and investigations on behalf of Congress to ensure accountability (Correct answer)
- Preparing the President's annual budget proposal
- Approving agency budget requests before submission to OMB
Correct answer: Conducting audits and investigations on behalf of Congress to ensure accountability
The GAO is an independent congressional watchdog that audits federal programs and agencies to assess efficiency, effectiveness, and compliance.
Question 3: In public sector budgeting, an 'appropriation' is best defined as:
- The President's request for funding submitted to Congress
- A statutory authorization by Congress permitting agencies to obligate and spend funds (Correct answer)
- An OMB circular directing agency spending priorities
- A GAO recommendation for reallocating resources
Correct answer: A statutory authorization by Congress permitting agencies to obligate and spend funds
An appropriation is a legal authorization enacted by Congress that allows a federal agency to incur obligations and make payments from the Treasury.
Question 4: Zero-Based Budgeting (ZBB) requires managers to:
- Increase each budget line by a standard inflation factor
- Justify every budget dollar from scratch each year rather than from a prior-year baseline (Correct answer)
- Reduce the prior year's budget by a set percentage
- Match expenditures exactly to the previous fiscal year's actuals
Correct answer: Justify every budget dollar from scratch each year rather than from a prior-year baseline
ZBB starts from a zero base each cycle and requires all programs to justify their existence and resource needs, eliminating automatic baseline increases.
Question 5: The Office of Management and Budget (OMB) plays which primary role in the federal budget process?
- Auditing federal agencies for fraud and waste
- Coordinating agency budget requests and preparing the President's budget submission to Congress (Correct answer)
- Approving all congressional appropriations bills
- Setting interest rates to control federal borrowing costs
Correct answer: Coordinating agency budget requests and preparing the President's budget submission to Congress
OMB assists the President in preparing the budget, oversees agency budget formulation, and monitors execution of approved spending plans.
Question 6: A continuing resolution (CR) in U.S. government budgeting is enacted when:
- Congress wants to increase spending above the debt ceiling
- Regular appropriations bills have not been passed by the start of the new fiscal year (Correct answer)
- An agency exceeds its authorized budget and needs emergency funds
- The President vetoes the annual budget and requests reconsideration
Correct answer: Regular appropriations bills have not been passed by the start of the new fiscal year
A CR allows government operations to continue at prior-year funding levels when Congress has not completed action on regular appropriations bills before October 1.
CBS CBS Government & Public Sector Budgeting 1
Which basis of accounting is most commonly used in U.S. federal government budgeting?