GASB considers interperiod (intergenerational) equity when
Answer(s): C
Comprehensive DetailedInterperiod (or intergenerational) equity is the concept that current-year revenues should be sufficient to pay for current-year services, so that future taxpayers are not burdened with today's costs.GASB incorporates interperiod equity as a core principle when developing financial reporting standards, especially to evaluate whether financial reporting helps users assess if the government is living within its means.Relevant
GASB Concepts Statement No. 1 Objectives of Financial ReportingGASB Statement No. 34 Emphasizes accountability and long-term sustainabilityGFOA Budgeting Best PracticesAnswer : C . issuing financial reporting guidelines
The Government Management Reform Act of 1994 amended the CFO Act of 1990 to require
Answer(s): B
The Government Management Reform Act (GMRA) of 1994 amended the Chief Financial Officers (CFO) Act of 1990 to require each executive agency to prepare and submit audited financial statements covering all accounts and associated activities.This extended the audit requirement beyond the pilot CFO agencies and laid the groundwork for the Financial Report of the U.S. Government.Relevant
Government Management Reform Act of 1994 (Public Law 103-356)CFO Act of 1990OMB Circular A-136 Financial Reporting RequirementsAnswer : B . audited financial statements of the executive departments
An agency offers service for a fee; bad debts have historically averaged 5% of each year's fee revenue. During the past fiscal year, $1.1 million in fee revenue was recorded and $1 million in fees was collected. What is the bad debt expense recorded for the past fiscal year?
The agency uses accrual accounting, meaning bad debt expense should be recognized based on the revenue earned, not the cash collected. The historical bad debt rate is 5%.Fee revenue recorded = $1.1 millionBad debt expense = 5% × $1,100,000 = $55,000This matches the standard accounting treatment under FASAB SFFAS No. 1, where the expense is estimated and recognized in the same period as the related revenue.Relevant
FASAB SFFAS No. 1 Accounting for Selected Assets and LiabilitiesGAAP treatment for allowance for doubtful accountsTreasury Financial Manual Accounts Receivable AccountingAnswer : C . $55,000
To capitalize a research and development asset, it must
Answer(s): D
Research and development (R&D) costs are generally expensed when incurred. However, capitalization may occur only if the asset has an "alternative future use." This means it can be used in other projects or for other purposes beyond the specific R&D effort.This principle aligns with both federal and private-sector accounting under FASAB and FASB standards.Relevant
FASAB SFFAS No. 10 Accounting for Internal Use SoftwareFASB ASC 730 Research and DevelopmentGAO Red Book Capitalization GuidelinesAnswer : D . have alternative future use
If a capital project has an estimated life of 30 years, which financing method is designed to impose the cost of the project on the generation who benefits from it?
Answer(s): A
Serial bonds mature in installments over the life of the bond (e.g., every year or every few years). This structure allows the cost of repaying the debt to align more closely with the periods in which the capital asset is used -- achieving intergenerational equity by spreading the cost over the same span as the asset's useful life.Term bonds, zero-coupon bonds, and pay-as-you-go do not align costs with benefits across multiple years in the same way.Relevant
GFOA Best Practices Debt Management and Capital PlanningGASB Concepts Statement No. 1 Interperiod EquityMSRB Educational Materials on Bond TypesAnswer : A . 30-year serial bonds
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