Government Financial Management and Cash Management Flashcards

Which federal law requires agencies to collect receivables promptly and deposit collections into the Treasury as quickly as possible?

Answer: The Cash Management Improvement Act of 1990

The Cash Management Improvement Act of 1990 requires states and the federal government to minimize the time between receiving federal funds and disbursing them for program purposes.

What is the primary purpose of the Prompt Payment Act in federal government?

Answer: Requiring federal agencies to pay vendors by specified due dates or pay interest penalties

The Prompt Payment Act requires federal agencies to pay vendors by the due date (generally 30 days after receipt of a proper invoice) or pay interest penalties.

What is 'cash management' in government financial management?

Answer: Optimizing the timing of cash inflows and outflows to minimize borrowing costs and maximize investment income

Government cash management involves optimizing collection, disbursement, and investment of funds to minimize idle cash, reduce borrowing needs, and maximize returns.

Which U.S. Treasury system serves as the federal government's central accounting system for recording receipts and disbursements?

Answer: CARS (Central Accounting Reporting System)

CARS (Central Accounting Reporting System) is Treasury's system that serves as the official source for government-wide account balances and financial data.

What is an 'Intra-governmental transaction' in federal financial management?

Answer: A financial transaction between two federal agencies where one acts as buyer and the other as seller

Intra-governmental transactions are financial transactions between two federal entities, such as when one agency provides goods or services to another agency.

What does 'working capital' mean in the context of government financial management?

Answer: The difference between current assets and current liabilities, indicating short-term financial health

Working capital is the difference between current assets and current liabilities, indicating whether an entity has sufficient short-term resources to meet its near-term obligations.