Class 1

Question 1

accrual basis

Answer 1

an accounting system that recognizes revenues in the year that the organization satisfies a performance obligation by transferring goods or services to a customer or client (whether received or not) and the expenses in the year that resources are used

Question 2

allocations

Answer 2

subdivisions of an appropriation into more detailed categories, such as responsibility centers, programs, or objects of expenditure. Sometimes, spending is further broken down into allotments

Question 3

allotments

Answer 3

a system that allocates budget resources to specific time periods or for use only after a certain event occurs

Question 4

appropriation

Answer 4

approval by the legislative body - be it a senate, assembly, town committee, or council - of spending for a specific line-item. Appropriations create the authorization for spending the amount in the budget

Question 5

audit

Answer 5

an examination of records or procedures. A financial audit seeks to determine whether an organization has complied with relevant accounting standards, internal procedures, and externally imposed laws and regulations, while a performance audit seeks to determine whether an organization is efficient in its use of resources to provide goods and services

Question 6

bad debts

Answer 6

amounts that are owed to the organization that are never collected

Question 7

budget

Answer 7

a plan that provides a formal, quantitative expression of management’s plans and intentions or expectations

Question 8

budget guidance memorandum

Answer 8

document that provides policies, goals, and performance expectations

Question 9

capital assets

Answer 9

buildings or equipment with useful lives extending beyond the year in which they are purchased or put into service; also referred to as long-term investments, capital items, capital investments, or capital acquisitions

Question 10

capital budget

Answer 10

plan for the acquisition of buildings and equipment that will be used by the organization in one or more years beyond the year of acquisition. A minimum dollar cutoff must be exceeded for an item to be included in the capital budget.

Question 11

cash basis

Answer 11

accounting system under which revenues are recognized when cash is received and expenses are recognized when cash is paid

Question 12

cash budget

Answer 12

plan for the cash receipts and cash disbursements of the organization

Question 13

depreciation expense

Answer 13

amount of the original cost of a fixed asset allocated as an expense each year

Question 14

domain

Answer 14

the scope of an organization’s operations in terms of what it does, where it does it, and the population it serves

Question 15

encumbrance

Answer 15

an indication that a certain amount of money has been earmarked for a particular purpose and is no longer available for other uses

Question 16

expenditure

Answer 16

term used instead of expense in modified accrual systems to contrast timing of recognition from when the item is used (expense under accrual) to when an obligation is incurred to pay for the item using current financial resources (expenditure under modified accrual)

Question 17

expense

Answer 17

the cost of services provided; expired cost

Question 18

financial budget

Answer 18

the cash budget and the capital budget together

Question 19

fiscal year

Answer 19

one-year period defined for financial purposes. A fiscal year may start at any point during the calendar year and finishes one year later. For example, “FY 2021 with a June 30 year-end” refers to the period from July 1, 2020, through June 30, 2021

Question 20

goal congruence

Answer 20

bringing together the goals, desires, and wants of the organization with those of its employees

Question 21

goal divergence

Answer 21

natural differences between the goals, desires, and needs of the organization and those of its employees

Question 22

long-range budget

Answer 22

plan that covers a period of time longer than 1 year, and is typically 3, 5, or 10 years

Question 23

long-range plan

Answer 23

((same as long-range budget))

Question 24

master budget

Answer 24

set of all the major budgets in the organization; generally includes the operating budget, long-range budget, program budgets, capital budget, and cash budget

Question 25

matching

Answer 25

for a given unit of service provided, the revenues arising from providing that service and the expenses incurred in providing that service are both recorded in the same fiscal period

Question 26

mill rate

Answer 26

the rate of taxation that a property owner must pay for each thousand dollars of the assessed valuation of a property; also known as the millage rate or mill levy

Question 27

mission

Answer 27

organization's set or primary goals that justify its existence

Question 28

mission statement

Answer 28

statement of the purpose or reason for existence of an organization, department, or unit. This statement provides direction regarding the types of activities that the organization should undertake

Question 29

modified cash basis

Answer 29

basis for accounting under which routine revenues and expenses are recognized on a cash basis but capital assets are recognized as expenses gradually over the years they are used rather than all in the year the organization pays for them

Question 30

objects of expenditure

Answer 30

items required to provide goods and services, including salaries, inventory, rent, equipment, and other resources

Question 31

operating budget

Answer 31

plan for the day-in and day-out operating revenues and expenses of the organization. It is generally prepared for one year

Question 32

outcome

Answer 32

the result that the organization is trying to achieve

Question 33

output

Answer 33

the number of units of service provided. For example, the number of meals served

Question 34

profit

Answer 34

amount by which an organization's revenues exceed its expenses

Question 35

recognition

Answer 35

the point at which a financial event is considered to have occurred and can be recorded in the financial records of the entity. The time of recognition differs under the cash and accrual bases of accounting

Question 36

responsibility center

Answer 36

part of the organization, such as a department or a unit, for which a manager is assigned responsibility

Question 37

revenue

Answer 37

amounts of money that the organization has received or is entitled to receive for satisfying a performance obligation by transferring goods or services to a customer or client

Question 38

special purpose budget

Answer 38

a plan for a specific project, program, or activity not covered by another budget

Question 39

strategic plan

Answer 39

plan that defines a broad set of goals for the organization and selects the primary approaches that the organization will take to achieve those goals

Question 40

strategy

Answer 40

broad plan for the attainment of goals

Question 41

support

Answer 41

funding that consists of contributions or grants

Question 42

allowance for uncollectible accounts

Answer 42

estimated portion of total accounts receivable that is expected not to be collected because of bad debts; sometimes called allowance for bad debts

Question 43

accounting

Answer 43

system for keeping track of the financial status of an organization and the financial results of its activities

Question 44

creditors

Answer 44

people or organizations to whom the organization owes money

Question 45

debt

Answer 45

liability; an amount owed by one individual or organization to another

Question 46

deficit

Answer 46

the excess of spending over receipts; excess of expenses over revenues. This term sometimes is used to refer to the current year or budgeted year and sometimes to an amount that has been accumulated over a period of years

Question 47

depreciation

Answer 47

amount of the original cost of a fixed asset allocated as an expense each year

Question 48

effectiveness

Answer 48

a measure of the degree to which the organization accomplishes its desired goals

Question 49

efficiency

Answer 49

a measure of how close an organization comes to minimizing the amount of resources used for the result attained

Question 50

federal funds rate

Answer 50

the interest rate banks charge when lending to each other on an overnight basis

Question 51

finance

Answer 51

field that focuses on the alternative sources and uses of the organization's financial resources such as cash, marketable securities, and debt

Question 52

financial accounting

Answer 52

system that records historical financial information, summarizes it, and provides reports of what financial events have occurred and of what the financial impact of those events has been

Question 53

financial management

Answer 53

the subset of management that focuses on generating financial information that can be used to improve decision making

Question 54

fiscal

Answer 54

financial

Question 55

gross federal debt

Answer 55

the debt issued by the US Treasury that is outstanding

Question 56

inventory

Answer 56

materials and supplies held for use in providing services or making a product

Question 57

managerial accounting

Answer 57

generation of any financial information that can help managers to manage better

Question 58

national debt

Answer 58

the total cumulative amount that the federal government has borrowed and not repaid, because its spending has exceeded its receipts

Question 59

net asset

Answer 59

the equivalent of owners' equity in a not-for-profit organization; assets less liabilities

Question 60

not-for-profit

Answer 60

an entity that (a) gets contributions from providers who do not expect an equal return, (b) has goals other than providing goods and services for a profit, and (c) has an absence of ownership interest

Question 61

off-budget

Answer 61

items that are not included in the normal federal government budget process (e.g. Social Security)

Question 62

on-budget

Answer 62

items that are included in the normal federal government budget process

Question 63

payables

Answer 63

short-term obligations

Question 64

proprietary

Answer 64

organization whose mission includes earning a profit that may be distributed to its owners; "for-profit"

Question 65

receivable

Answer 65

money owed to the organization or individual in exchange for goods and services it has provided; "accounts receivable"

Question 66

sequestration

Answer 66

in the context of federal budget, sequestration entails cross-the-board cuts to discretionary spending

Question 67

surplus

Answer 67

an excess of receipts over spending (e.g. profit)

Question 68

tax-exempt

Answer 68

organizations that are exempt from federal income tax liabilities

Question 69

vendor

Answer 69

supplier who sells to an organization