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Student name:__________
TRUE/FALSE – Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) Budgeting is an important part of a manager’s planning and control responsibilities in
both public and private organizations.
⊚ true
⊚ false
2) In governments, the budget has always played a role in external financial reports through
the required budget-to-actual comparison schedules or statements for those funds that have a
legally approved budget.
⊚ true
⊚ false
3) The type of budgeting that relates input of resources to output of services is zero-based
budgeting.
⊚ true
⊚ false
4) Performance budgeting is a plan for relating resource inputs to the efficient production of
outputs.
⊚ true
⊚ false
5) Popular budgeting approaches employed by governments include incremental budgeting,
performance budgeting, program budgeting, planning-programming-budgeting systems, and
zero-based budgeting.
⊚ true
⊚ false
6) Government budgets must be voted upon by citizens for approval in an annual general
election.
⊚ true
⊚ false
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7) Prior to legislative adoption of the budget, public hearings must be held to provide
adequate opportunity for citizens’ input to government budgets.
⊚ true
⊚ false
8) Cash planning and budgeting are important in government because the timing of cash
inflows often does not necessarily coincide with the timing of cash outflows.
⊚ true
⊚ false
9) Under GASB standards, every government, regardless of its size, is instructed to prepare
a cash budget for each month of the fiscal year.
⊚ true
⊚ false
10) Budget appropriations for governmental funds ordinarily cover only one year, while
capital budgets are often multi-year.
⊚ true
⊚ false
11) A government generally does not choose a single budgeting approach to the exclusion of
the others.
⊚ true
⊚ false
12) The data analytics movement prevalent in the private sector has impacted governments as
well.
⊚ true
⊚ false
13) Budgeting is distinct from financial accountability and managerial control over scarce
resources.
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⊚ true
⊚ false
14) Service efforts and accomplishments measures suffer from the same problem as line-item
or object-of-expenditures budgeting; that is, focusing only on resource inputs while ignoring
outputs and outcomes of governmental activities.
⊚ true
⊚ false
15) To determine which costs are allowable for charging to a federal assistance program,
accountants and auditors refer to the applicable GASB cost circular.
⊚ true
⊚ false
16) Service efforts and accomplishments (SEA) reporting helps citizens, elected officials,
appointed officials, investors and creditors, and other interested parties evaluate the government’s
performance in the absence of a “bottom line” measure such as exists for for-profit entities.
⊚ true
⊚ false
17) Under service efforts and accomplishments (SEA) reporting input measures are quantity
measures that reflect the quantity of a service provided, such as the number of lane-miles of road
repaired.
⊚ true
⊚ false
18) Under service efforts and accomplishments (SEA) reporting, outcome measures gauge
accomplishments, or the results of services provided, such as the percentage of lane-miles of
road in excellent, good, or fair condition.
⊚ true
⊚ false
19) Service efforts and accomplishments reporting is now required by the GASB for
governments with populations over 500,000.
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⊚ true
⊚ false
20) A major disadvantage of activity-based costing (ABC) in a government setting is the very
limited number of activities for which it can be used.
⊚ true
⊚ false
21) A major advantage of activity-based costing (ABC) is that it reduces unit cost distortions
arising from overhead allocations that often occur using traditional cost accounting systems.
⊚ true
⊚ false
22) The sole purpose of preparing a government budget is to show compliance with laws and
regulations.
⊚ true
⊚ false
23) GASB Concepts Statement No. 2 requires state and local governments to include service
efforts and accomplishments measures within the comprehensive annual financial report.
⊚ true
⊚ false
24) Due to regulatory issues, governments cannot use data analytics for decision making.
⊚ true
⊚ false
25) Enterprise risk management enables governments to identify ways to mitigate identified
risks via preventative and control measures, risk transfer, and risk retention.
⊚ true
⊚ false
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26) A balanced scorecard is an integrated set of performance targets, both financial and
nonfinancial, that are derived from an organization’s strategies about how to achieve its goals.
⊚ true
⊚ false
27) Under certain circumstances a cost generally unallowable under a grant agreement may
be allowable.
⊚ true
⊚ false
28) Governments receiving federal grants and contract funds are expected to have an
accounting information system with adequate internal controls that can deliver reliable
information to compare the actual amount spent with budgeted amounts.
⊚ true
⊚ false
29) The United States Office of Management and Budget (OMB) publishes uniform guidance
that provides streamlined guidelines for grant accounting and reporting.
⊚ true
⊚ false
30) Service efforts and accomplishments reporting is also referred to as citizen-centric
reporting.
⊚ true
⊚ false
MULTIPLE CHOICE – Choose the one alternative that best completes the statement or
answers the question.
31) Which of the following statements is not consistent with the GASB’s “Budgeting
Principle”?
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A) An annual budget must be adopted using generally accepted accounting principles.
B) The accounting system should provide the basis for appropriate budgetary control.
C) Budgetary comparisons should be presented for the General Fund and each major
special revenue fund for which an annual budget has been adopted.
D) The budgetary comparisons should present both the original and the final
appropriated budgets for the reporting period.
32) The GASB “Budgeting Principle” states that an annual budget should be adopted by (for)
every:
A) Fiduciary fund type.
B) Fund of a government.
C) Governmental unit.
D) Governmental fund type except special revenue funds.
33) A common approach to budgeting line-items whereby the current year’s budget is
constructed by adding or subtracting amounts expected to be required by line items is:
A) Performance budgeting.
B) Zero-based budgeting.
C) Program budgeting.
D) Incremental budgeting.
34) Which of the following is not a typical step in the budgeting process for a state or local
government?
A) Request by management for input on the budget.
B) Review and revisions of the budget by the administrative staff of each unit.
C) Public hearings for citizen input.
D) Approval by a majority vote of the citizenry.
35) A budgeting method whereby the very existence of each activity as well as the amounts
of resources requested to be allocated to each activity must be justified each year is called:
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A) Planning-programming-budgeting.
B) Incremental budgeting.
C) Zero-based budgeting.
D) Performance budgeting.
36) In budgeting revenues, state and local government administrators should:
A) Be cautious not to utilize unauthorized sources or exceed authorized ceilings on
revenues from specific sources.
B) Ensure that at least the amount of revenues needed to meet spending needs are raised,
even if authorized ceilings on some revenue sources must be exceeded.
C) Utilize all authorized revenue sources at the maximum amount allowed by law.
D) Ignore “other financing sources” since these resource inflows are not available for
appropriation.
37) Cash receipts and cash disbursement budgets for a government:
A) Should be prepared for all funds for the entire fiscal year.
B) Should be prepared monthly or as needed to enhance cash management, investment
management, and short-term debt management.
C) Should be prepared for only those funds for which appropriations budgets are
required by law to be prepared on the accrual basis or the modified accrual basis.
D) Should be prepared for only those funds for which appropriations budgets are not
required by law.
38) Cash disbursement budgets:
A) Are prepared to facilitate the preparation of government-wide financial statements.
B) Are usually prepared for each month of the year, or for shorter intervals, in order to
facilitate planning short-term borrowings and investments.
C) Are prepared only for funds not required to operate under legal appropriation
budgets.
D) Are prepared only for each fiscal year because disbursements for each month are
approximately equal.
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39) The schedule of legally required events in the budgeting process is generally referred to
as the:
A) Budget docket.
B) Legal timetable.
C) Hearing schedule.
D) Budget calendar.
40) Effective capital budgeting for general capital assets of a government requires:
A) Intermediate and long-range capital improvement plans for general capital assets.
B) Nonfinancial information on physical measures and service condition of capital
assets of component units.
C) Consideration of how proprietary fund capital projects will be financed.
D) Information about the capital asset needs of a motor pool accounted for as an internal
service fund.
41) Which of the following statements regarding government budgets is not true?
A) A budget should be enacted before the fiscal year begins and be integrated with the
financial accounting system so that actual results can be compared to budgets at regular intervals.
B) The budget’s role is limited to inclusion in internal financial reports and budgetary
compliance monitoring for those funds that have a legally approved budget.
C) Integrating the budget into the accounting system allows management to oversee
individual unit performance and react quickly to variances between actual results and budgeted
plans.
D) A budget is a plan of financial operation embodying an estimate of proposed
expenditures for a given period of time and the proposed means of financing them.
42) Which of the following might appropriately be termed an outcome indicator for a fire
department that reports service efforts and accomplishments (SEA) indicators?
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A) Number of fires investigated.
B) Decrease in fires.
C) Number of fire alarms installed.
D) Number of personnel hours expended.
43) Which of the following statements regarding service efforts and accomplishments (SEA)
is not true?
A) SEA information includes indicators of a government’s actual performance in
providing services to its citizens.
B) As governments integrate strategic planning, budgeting, and performance
measurement, information on SEA is available and often provided to the public.
C) SEA reporting may take the form of a published report, an electronic report posted
on a government’s website, or a pamphlet designed to summarize an entity’s SEA measurement
results.
D) SEA reporting is required by governments with populations greater than 500,000.
44) Which of the following statements is not true?
A) A balanced scorecard is an integrated set of performance targets, both financial and
nonfinancial, that are derived from an organization’s strategies about how to achieve its goals.
B) Enhancements to electronic data gathering and statistical techniques for analyzing
such data allow both private and public sector executives to improve operational efficiency and
decision making.
C) Service efforts and accomplishments (SEA) reporting links customer (taxpayer and
other resource provider) satisfaction to improvements in the operating systems and processes
used to provide goods and services.
D) The goal of Enterprise Risk Management (ERM) in government is to facilitate
government operations by identifying ways to mitigate identified risks via preventative and
control measures, risk transfer, and risk retention.
45) The number of lane-miles of road repaired to a specified minimum condition is an
example of an:
A) Output measure.
B) Input measure.
C) Outcome measure.
D) Efficiency measure.
46) Service efforts and accomplishments (SEA) information:
A) Includes indicators of a government’s actual performance in providing services to its
citizens.
B) Aids users in assessing the economy, efficiency, and effectiveness of government.
C) Is required for all governments that issue a CAFR.
D) Both includes indicators of a government’s actual performance in providing services
to its citizens and aids users in assessing the economy, efficiency, and effectiveness of
government are true.
47) Balanced scorecards integrate all of the following into a document that can be shared
with employees and stakeholders except:
A) GASB financial reporting standards.
B) Internal business processes measures.
C) Nonfinancial measures, such as customer satisfaction.
D) Financial performance measures.
48) Which of the following has contributed most to governments’ interest in activity-based
costing?
A) GASB standards.
B) Implementation of innovative management approaches (such as ERM and SEA
measures) in response to public demand for greater accountability and productivity.
C) Increased demand for high profile management tools to bolster the image of
government.
D) The enactment of Sarbanes-Oxley legislation.
49) All of the following are objectives of activity-based cost (ABC) accounting in
government except:
A) To preserve, at a minimum, the present quality and availability of services.
B) To help find lower cost alternatives to providing services.
C) To link customer (taxpayer) satisfaction to improvements in the operating systems
used to provide goods and services.
D) To make increases in the volume of services dependent on reducing costs.
50) Efficiency measures, as the term is used in the service efforts and accomplishments
(SEA) literature, can be described as:
A) Measures that relate the quantity or cost of resources used to units of output.
B) Measures that relate to the amount of financial and nonfinancial resources used in a
program or process.
C) Measures that relate costs to outcomes.
D) Measures that reflect either the quantity or quality of a service provided.
51) The GASB identifies which of the following three broad categories of service efforts and
accomplishments (SEA) measures:
A) Measures of service efforts, measures of service accomplishments, and measures of
efficiency.
B) Measures of service efforts and accomplishments, measures of service efficiency,
and measures of service effectiveness.
C) Measures of service efforts, measures of service accomplishments, and measures of
the costs of service efforts and accomplishments.
D) Measures of service efforts, measures of service accomplishments, and measures that
relate efforts to accomplishments.
52) Which of the following statements regarding service efforts and accomplishments (SEA)
is not true?