CGFM Government Financial Management and Cash Management 2 — Questions and Answers
Question 1: What is a 'revolving fund' in the federal government?
- A fund that automatically renews each fiscal year
- A fund that sustains its operations by charging other agencies for goods or services and using the proceeds to cover its costs (Correct answer)
- A reserve fund for emergencies
- A fund that pays interest on federal debt
Correct answer: A fund that sustains its operations by charging other agencies for goods or services and using the proceeds to cover its costs
A revolving fund finances a continuing cycle of operations, recovering costs through charges to customers and using the receipts to finance continuing operations without annual appropriations.
Question 2: What is the Treasury's Financial Management Service (now Bureau of the Fiscal Service) primarily responsible for?
- Setting accounting standards for federal agencies
- Disbursing federal payments, collecting federal revenue, and managing the federal government's cash (Correct answer)
- Auditing federal agency financial statements
- Preparing the President's budget request
Correct answer: Disbursing federal payments, collecting federal revenue, and managing the federal government's cash
The Bureau of the Fiscal Service (formerly FMS) manages the government's finances by disbursing payments, collecting revenue, producing financial reports, and managing federal debt.
Question 3: In government financial management, what is 'debt management'?
- Collecting delinquent taxes from citizens
- Managing the federal government's outstanding debt obligations including issuance, interest payments, and retirement of securities (Correct answer)
- Overseeing agency credit card programs
- Approving agency loans to contractors
Correct answer: Managing the federal government's outstanding debt obligations including issuance, interest payments, and retirement of securities
Federal debt management involves issuing Treasury securities, making interest payments, retiring maturing debt, and managing the overall composition and maturity structure of the public debt.
Question 4: What is 'float' in the context of government cash management?
- The amount of money in transit between payer and payee (Correct answer)
- Funds invested in Treasury securities
- The difference between the budget and actual spending
- Cash held in agency petty cash accounts
Correct answer: The amount of money in transit between payer and payee
Float is the amount of money in transit — disbursement float occurs when a check is issued but not yet cleared; collection float is when a payment is received but not yet available.
Question 5: Which electronic system does the federal government primarily use to disburse payments to employees and vendors?
- FEDWIRE
- Electronic Funds Transfer (EFT) through ACH (Correct answer)
- Check issuance through FedEx
- SWIFT network payments
Correct answer: Electronic Funds Transfer (EFT) through ACH
The federal government uses Electronic Funds Transfer (EFT) through the Automated Clearing House (ACH) network as the primary method for disbursing payments, reducing paper check costs.
Question 6: What is an 'allotment' in the context of federal budget execution?
- The total appropriation granted by Congress
- An agency's subdivision of an apportionment to subordinate organizational units for obligation (Correct answer)
- OMB's distribution of funds to agencies
- The amount of funds transferred to another agency
Correct answer: An agency's subdivision of an apportionment to subordinate organizational units for obligation
An allotment is the agency's internal distribution of an apportionment to program offices or organizational units, authorizing them to obligate funds up to a specified amount.
CGFM Government Financial Management and Cash Management 2
What is a 'revolving fund' in the federal government?