CDFM Working Capital Fund Management 5

Question 1

What is the primary purpose of the 'corpus' or initial capital of a DoD Working Capital Fund?

Accepted Answer

To provide startup capital so the fund can operate before collecting sufficient revenues

Answer

The initial corpus provides working capital so the fund can purchase inventory and deliver services before customer payments are received.

Question 2

Which metric is most commonly used to evaluate the cash sufficiency of a DoD Working Capital Fund?

Accepted Answer

Days of operating cash on hand

Answer

Days of operating cash on hand measures how long a WCF can sustain operations without additional cash inflows, a key liquidity indicator.

Question 3

Under DoD policy, what happens to a WCF activity's accumulated operating results (AOR) that exceed the authorized variance threshold?

Accepted Answer

Rates must be adjusted downward to return AOR to within acceptable limits

Answer

When AOR exceeds policy thresholds, the activity is required to reduce future rates to return the net position toward zero.

Question 4

A Supply Management Activity within the DWCF sells materiel at a price below standard price due to an approved discount. How is the resulting loss treated?

Accepted Answer

Absorbed by the selling activity as an operating loss

Answer

Losses from approved price reductions are absorbed by the supply management activity and reflected in its accumulated operating results.

Question 5

Which DoD instruction establishes the primary financial management policy framework for Defense Working Capital Funds?

Accepted Answer

DoDI 7000.14-R (FMR) Volume 11B

Answer

DoDI 7000.14-R, Volume 11B of the Financial Management Regulation, provides the authoritative policy for DWCF financial management.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Working Capital Fund Management 5