CDFM Accounting and Financial Reporting 4

Question 1

Under GAAP for federal entities, how are general property, plant, and equipment (G-PP&E) assets depreciated?

Accepted Answer

Using any method that systematically allocates cost over useful life

Answer

SFFAS No. 6 allows various depreciation methods (straight-line, declining balance, etc.) as long as the method systematically allocates cost over the asset's estimated useful life.

Question 2

In federal accounting, 'imputed financing' from costs paid by other federal entities is recorded to:

Accepted Answer

Recognize the full cost of an agency's operations

Answer

Imputed financing (e.g., OPM-paid benefits, Treasury borrowing costs) is recognized so that the agency's Statement of Net Cost reflects the full economic cost of its operations.

Question 3

A DoD installation discovers environmental contamination from prior operations. Under SFFAS No. 5, the cleanup liability should be recorded when:

Accepted Answer

The contamination is discovered and cleanup costs can be reasonably estimated

Answer

Environmental liabilities are recognized when the obligating event (contamination from prior operations) has occurred and cleanup costs can be reasonably estimated.

Question 4

Which concept explains why DoD must report the cost of military equipment used in operations even if it was purchased in a prior fiscal year?

Accepted Answer

Accrual accounting and expense matching

Answer

Accrual accounting requires matching expenses (depreciation on assets) to the periods in which the assets provide service, regardless of when cash was paid.

Question 5

The Reconciliation of Net Cost of Operations to Budget (formerly the SBR Schedule P) is used to:

Accepted Answer

Identify differences between proprietary (accrual) and budgetary accounting results

Answer

This reconciliation bridges proprietary accrual-based net cost of operations and the budgetary obligated amounts, explaining differences due to timing and other factors.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Accounting and Financial Reporting 4