CGFM Government Financial Management and Cash Management 1 — Questions and Answers
Question 1: Which federal law requires agencies to collect receivables promptly and deposit collections into the Treasury as quickly as possible?
- The Cash Management Improvement Act of 1990 (Correct answer)
- The Debt Collection Improvement Act of 1996
- The Federal Claims Collection Act
- The Prompt Payment Act
Correct 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.
Question 2: What is the primary purpose of the Prompt Payment Act in federal government?
- Requiring vendors to submit invoices within 30 days
- Requiring federal agencies to pay vendors by specified due dates or pay interest penalties (Correct answer)
- Requiring immediate payment of all tax refunds
- Requiring same-day processing of payroll
Correct 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.
Question 3: What is 'cash management' in government financial management?
- Managing currency in government vaults
- Optimizing the timing of cash inflows and outflows to minimize borrowing costs and maximize investment income (Correct answer)
- Balancing the government's checkbook monthly
- Issuing government bonds to fund operations
Correct 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.
Question 4: Which U.S. Treasury system serves as the federal government's central accounting system for recording receipts and disbursements?
- GFRS (Government Financial Reporting System)
- IPAC (Intra-governmental Payment and Collection)
- CARS (Central Accounting Reporting System) (Correct answer)
- SAM (System for Award Management)
Correct 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.
Question 5: What is an 'Intra-governmental transaction' in federal financial management?
- A transaction between federal agencies within the same department
- A financial transaction between two federal agencies where one acts as buyer and the other as seller (Correct answer)
- A transfer of funds from federal to state governments
- A payment between federal contractors
Correct 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.
Question 6: What does 'working capital' mean in the context of government financial management?
- Funds available for capital construction projects
- The difference between current assets and current liabilities, indicating short-term financial health (Correct answer)
- Congressional appropriations for operating expenses
- Revolving fund balances available for operations
Correct 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.
CGFM Government Financial Management and Cash Management 1
Which federal law requires agencies to collect receivables promptly and deposit collections into the Treasury as quickly as possible?