CGAP Government Financial Management 1 — Questions and Answers
Question 1: Which accounting basis does the U.S. federal government primarily use for its consolidated financial statements?
- Cash basis
- Modified accrual basis
- Full accrual basis (Correct answer)
- Budgetary basis
Correct answer: Full accrual basis
The U.S. federal government uses full accrual accounting for its consolidated financial statements as required by federal accounting standards.
Question 2: What does the Antideficiency Act prohibit U.S. federal agencies from doing?
- Hiring contractors without competition
- Obligating funds in excess of amounts appropriated (Correct answer)
- Investing surplus funds in securities
- Transferring appropriations between fiscal years
Correct answer: Obligating funds in excess of amounts appropriated
The Antideficiency Act prohibits federal agencies from obligating or expending funds beyond what Congress has appropriated.
Question 3: Which body sets accounting and financial reporting standards for U.S. federal entities?
- GASB
- FASB
- FASAB (Correct answer)
- AICPA
Correct answer: FASAB
The Federal Accounting Standards Advisory Board (FASAB) establishes generally accepted accounting principles for federal reporting entities.
Question 4: In government budgeting, what is an 'obligation'?
- Actual cash disbursed for goods received
- A legally binding commitment that will require future outlays (Correct answer)
- A budget request submitted to the legislature
- A transfer of funds between programs
Correct answer: A legally binding commitment that will require future outlays
An obligation is a legally binding act that commits the government to make a payment once conditions are met, such as signing a contract.
Question 5: Which financial statement is unique to the U.S. federal government and not found in state/local reporting?
- Balance sheet
- Statement of Net Cost (Correct answer)
- Statement of Cash Flows
- Statement of Changes in Net Assets
Correct answer: Statement of Net Cost
The Statement of Net Cost reports the net cost of operations for federal programs and is specific to the federal reporting model.
Question 6: What is 'apportionment' in the U.S. federal budget process?
- Congressional approval of a full-year budget
- OMB's distribution of appropriated funds to agencies over time (Correct answer)
- An agency's internal allocation of funds to programs
- A rescission of unspent appropriations
Correct answer: OMB's distribution of appropriated funds to agencies over time
Apportionment is the process by which OMB distributes appropriated amounts to agencies, usually by quarter, to prevent early over-spending.
CGAP Government Financial Management 1
Which accounting basis does the U.S. federal government primarily use for its consolidated financial statements?