CDFM Working Capital Fund Management 3

Question 1

When a WCF business area's actual costs exceed its budgeted costs mid-year, the preferred course of action is to:

Accepted Answer

Absorb the variance and adjust rates in the next budget cycle

Answer

Stabilized rates are fixed for the fiscal year, so mid-year cost overruns are absorbed by the WCF and recovered through rate adjustments in the next budget cycle to maintain customer predictability.

Question 2

What is the role of the 'customer fund' relationship in WCF operations?

Accepted Answer

Customers use their own appropriations to order and pay for WCF goods and services

Answer

Customers use their own appropriated funds (e.g., O&M) to place orders and reimburse the WCF, creating the revenue stream that makes the WCF self-sustaining.

Question 3

Which of the following best describes the 'two-year budget cycle' concept for WCF pricing?

Accepted Answer

WCFs evaluate break-even performance across the current and budget year to assess rate adequacy

Answer

DoD evaluates WCF break-even performance across the current year and the upcoming budget year together, allowing short-term imbalances to be corrected within a two-year window.

Question 4

In the context of DoD WCF, what is an 'activity group'?

Accepted Answer

A distinct business line within a WCF that provides specific goods or services and maintains separate financial accounts

Answer

An activity group is a separately identifiable business line within a WCF (e.g., Supply Management, Depot Maintenance) with its own financial accounts, rates, and performance metrics.

Question 5

Which of the following is NOT a characteristic of a DoD Working Capital Fund?

Accepted Answer

Annual appropriation expiration — funds expire at fiscal year-end

Answer

Unlike annual appropriations that expire, WCF authority is continuous and revolving — unobligated balances carry forward without expiration because the fund is self-financing.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Working Capital Fund Management 3