CDFM Accounting and Finance 4

Question 1

The concept of 'materiality' in federal financial reporting means that an item should be disclosed if omitting it would:

Accepted Answer

Cause the financial statements to mislead a reasonable user

Answer

Materiality is the threshold at which omission or misstatement of information could influence the decisions of a reasonable user of the financial statements.

Question 2

Under SFFAS No. 5, a federal entity must recognize a contingent liability when two conditions are met. Which pair correctly states those conditions?

Accepted Answer

The loss is probable and the amount can be reasonably estimated

Answer

SFFAS No. 5 requires liability recognition when a future outflow is probable and the amount can be reasonably estimated.

Question 3

What is the purpose of the DoD's Standard Financial Information Structure (SFIS)?

Accepted Answer

To standardize financial data elements across all DoD components for consistent reporting

Answer

SFIS provides a common data standardization framework to enable consistent financial reporting, auditing, and decision-making across all DoD components.

Question 4

In DoD budgetary accounting, which event first establishes a legal claim against an appropriation?

Accepted Answer

Obligation

Answer

An obligation is the legal reservation of funds, such as a signed contract or purchase order, that creates a binding commitment against the appropriation.

Question 5

A military installation receives an advance payment from a non-federal customer for services to be performed next quarter. How should this be recorded initially?

Accepted Answer

Deferred revenue (liability)

Answer

Cash received before earning revenue is recorded as deferred revenue, a liability, until the service is performed.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Accounting and Finance 4