The Department of Health and Human Services prepares a financial statement displaying costs of each major program as they relate to the department's outcomes and outputs. The title of this financial statement is the
Answer(s): A
The Statement of Net Cost is the principal financial statement used by federal agencies to report the total cost of their programs and activities. It aligns the agency's programs, outputs, and strategic objectives with the cost incurred to produce those outputs.The Department of Health and Human Services, like all federal agencies, uses this statement to display costs by major program or responsibility segment.Relevant
FASAB SFFAS No. 4 Managerial Cost Accounting StandardsFASAB SFFAS No. 55 Amending the Statement of Net CostOMB Circular A-136 Section on Federal Financial StatementsAnswer : A. Statement of Net Cost
Accounts that are closed at year-end include
Answer(s): B
Temporary accounts (revenues, expenditures, and transfers) are closed at the end of the fiscal year to prepare the books for the next fiscal period. Tax revenues are a temporary account and are closed at year-end by transferring balances to fund balance accounts.In contrast:Taxes receivable (A) is a balance sheet (permanent) account.Supplies inventory (C) is an asset.Unassigned fund balance (D) is an equity account.Relevant
GASB Codification Section 2200 Fund Accounting and Closing ProceduresGFOA Accounting and Financial Reporting ManualGAAP FundamentalsAnswer : B. tax revenues
Purchase orders are issued in the amount of $427,000. The general ledger entry to record the encumbrance should be
Answer(s): D
When a government issues purchase orders, it records encumbrances to reflect commitments against appropriations. This helps track budgetary commitments and avoid overspending.The entry is recorded in the budgetary accounts (not proprietary accounts) as follows:Debit Encumbrances: Recognizes the commitmentCredit Budgetary Fund Balance (or Reserve for Encumbrances): Reflects that part of the fund balance is committedThis is consistent with modified accrual accounting and standard governmental fund practice.Relevant
GASB Codification Section 1300 Budgetary AccountingGFOA Best Practices Encumbrance AccountingGAO Principles of Appropriation Law Encumbrance ControlsAnswer : D. Debit Encumbrances $427,000; Credit Budgetary Fund Balance $427,000
Funds collected and spent to carry out an unemployment program established by federal statute are deposited in
Answer(s): C
Unemployment programs, such as those established by federal law (e.g., Unemployment Insurance), are typically funded through employment taxes and administered through federal trust funds. These funds are earmarked for specific purposes and are deposited into trust fund accounts, which are fiduciary in nature and maintained to provide benefits under the terms of a law or trust agreement.The Unemployment Trust Fund is a specific example maintained by the U.S. Department of the Treasury.Relevant
FASAB SFFAS No. 27 Identifying and Reporting Earmarked FundsTreasury Financial Manual Trust Fund AccountsGAO Glossary Trust Fund DefinitionAnswer : C. trust funds
GASB establishes standards through a
The Governmental Accounting Standards Board (GASB) issues accounting standards after a structured due process that includes:Publication of a Discussion Document (e.g., Preliminary Views)Publication of an Exposure DraftSolicitation and analysis of public comments (written/oral)Deliberation by the full BoardA majority vote (not unanimous) of the GASB board members is required to approve and issue a final standard.Relevant
GASB Rules of ProcedureGASB Due Process ManualGASB Website Standard-Setting ProcessAnswer : D. vote of the majority of board members, after discussing the written and oral comments offered by interested parties on an exposure draft of a statement of proposed standards
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