CDFM Working Capital Fund Management 2

Question 1

What is the key distinction between a WCF appropriation and a direct appropriation?

Accepted Answer

WCF appropriations are revolving and replenished by customer receipts; direct appropriations are one-time congressional grants

Answer

WCFs revolve because revenues from customer charges replenish the fund continuously, whereas direct appropriations are discrete funding grants from Congress that do not automatically replenish.

Question 2

In DoD WCF management, what does 'break-even' mean?

Accepted Answer

Revenues collected equal total costs incurred over a two-year budget cycle

Answer

WCFs are designed to break even over the long run, meaning total revenues collected from customers should equal total costs incurred, typically measured over a two-year budget cycle.

Question 3

Which entity sets the prices (stabilized rates) charged by WCF business areas to their customers?

Accepted Answer

The DoD Comptroller in coordination with each Military Department

Answer

The DoD Comptroller (OUSD(C)) works with the Military Departments and Defense Agencies to set stabilized rates that recover full costs while maintaining customer budget predictability.

Question 4

What happens when a WCF business area accumulates a large net operating gain (surplus)?

Accepted Answer

Rates must be reduced in future years to return the surplus to customers

Answer

Consistent with the break-even principle, large surpluses must be returned to customers through rate reductions in future years to prevent the WCF from operating as a profit center.

Question 5

The Defense Logistics Agency (DLA) Supply Chain activity group primarily finances its operations through:

Accepted Answer

Revolving fund revenues from sales of supplies and materiel to customers

Answer

DLA Supply Chain operates as a WCF activity, financing operations through sales of wholesale supplies and materiel to military services and other authorized customers.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Working Capital Fund Management 2