CDFM Working Capital Fund Management 4

Question 1

Which pricing mechanism do DoD Working Capital Funds use to recover costs from customer orders?

Accepted Answer

Stabilized rates set in advance

Answer

WCFs use stabilized rates established at the start of the fiscal year so customers can budget predictably for services.

Question 2

A WCF activity ends the fiscal year with a significant accumulated operating loss. What is the most appropriate corrective action?

Accepted Answer

Raise stabilized rates in the next budget cycle to recover the loss

Answer

Rate adjustments in the subsequent budget cycle are the standard mechanism for recovering accumulated losses within a WCF.

Question 3

What term describes the concept that WCF rates should neither generate large surpluses nor incur large losses over time?

Accepted Answer

Break-even pricing

Answer

The break-even pricing principle requires WCF rates to recover full costs without systematically over- or under-recovering.

Question 4

Under what authority does a WCF activity provide goods or services to non-DoD federal agencies?

Accepted Answer

Economy Act orders

Answer

The Economy Act (31 U.S.C. § 1535) authorizes federal agencies to order goods and services from other federal agencies, including DoD WCF activities.

Question 5

Which financial statement is unique to WCF reporting and is NOT produced by general fund appropriations?

Accepted Answer

Cash Flow Statement

Answer

WCFs produce a Statement of Cash Flows because they operate as business-like enterprises with continuous cash receipts and disbursements.

CDFM - Certified Defense Financial Manager Practice Test