GPC Financial Management & Budgeting 1 — Questions and Answers
Question 1: What is a 'direct cost' in grant budgeting?
- Costs that benefit multiple projects and cannot be specifically identified
- Costs that can be specifically identified with a particular sponsored project (Correct answer)
- Costs allocated to overhead and administrative functions
- Costs that are reimbursed only after project completion
Correct answer: Costs that can be specifically identified with a particular sponsored project
Direct costs are those that can be specifically and exclusively identified with a particular sponsored project or activity.
Question 2: Which federal regulation governs cost principles for non-profit organizations receiving federal grants?
- 2 CFR Part 200 (Correct answer)
- FAR Part 31
- OMB Circular A-21
- 45 CFR Part 74
Correct answer: 2 CFR Part 200
2 CFR Part 200 (Uniform Guidance) consolidated federal grant regulations including cost principles for non-profits and other entities.
Question 3: What is the primary purpose of a budget justification in a grant proposal?
- To list all personnel involved in the project
- To explain and justify each budget line item to the funder (Correct answer)
- To demonstrate the organization's financial history
- To outline the project timeline and milestones
Correct answer: To explain and justify each budget line item to the funder
A budget justification provides detailed explanations for each line item, demonstrating that costs are necessary, reasonable, and allowable.
Question 4: What does 'cost sharing' or 'matching' mean in the context of grant funding?
- The distribution of costs between two or more federal funders
- The grantee's contribution of resources to the funded project from non-federal sources (Correct answer)
- The allocation of indirect costs across multiple grants
- The process of splitting a grant award between departments
Correct answer: The grantee's contribution of resources to the funded project from non-federal sources
Cost sharing refers to the portion of project costs the grantee contributes from non-federal sources to supplement the grant award.
Question 5: Which of the following is typically NOT an allowable cost under most federal grants?
- Salaries for project staff
- Travel to conferences directly related to the project
- Alcoholic beverages served at a project event (Correct answer)
- Supplies used exclusively for the project
Correct answer: Alcoholic beverages served at a project event
Alcoholic beverages are explicitly listed as unallowable costs under 2 CFR Part 200 and most federal grant cost principles.
Question 6: What is a 'budget modification' in grant management?
- Changing the grant's objectives mid-project without funder approval
- A formal process to reallocate funds between budget categories (Correct answer)
- The final financial report submitted to the funder at closeout
- A request to extend the project's period of performance
Correct answer: A formal process to reallocate funds between budget categories
A budget modification is a formal process where a grantee requests permission to move funds between budget categories when project needs change.
Question 7: What does 'period of performance' mean in grant budgeting?
- The timeframe during which grant funds may be obligated and expended (Correct answer)
- The annual audit period required by the funder
- The timeline for submitting financial reports to the government
- The duration of the grant professional's employment contract
Correct answer: The timeframe during which grant funds may be obligated and expended
The period of performance is the specific timeframe authorized by the funder during which the grantee may incur costs and spend awarded funds.
GPC Financial Management & Budgeting 1
What is a 'direct cost' in grant budgeting?