Ch 2: Logic of the Budget Process

Question 1

Most important budget question

Answer 1

On what basis does budget go to one program over another

Question 2

Two categories of government spending

Answer 2

Transfer payment to individuals
Government purchase of goods and services

Question 3

Examples of transfer payments

Answer 3

Social security
Medicaid
Unemployment/worker’s comp
Food stamps

Question 4

Transfer payments comprise _____% of government expenditures in US

Answer 4

40%

Question 5

GDP

Answer 5

Monetary value of all finished goods and services made within a country during a specific time period

Question 6

T or F, Government purchases and gross investment contribute to GDP

Answer 6

True

Question 7

Percent of GDP that can be attributed to fed/state/local government spending

Answer 7

30-35%

Question 8

A budget is

Answer 8

a financial plan that focuses on financial implications of a particular response within certain operating conditions

It translates policy objectives into costs to achieve certain objectives

Question 9

T or F, a budget is a revenue or spending forecast

Answer 9

False–it represents the intended response of an organization to expected conditions

Question 10

A good budget includes

Answer 10

a fiscal and a managerial plan

Question 11

Governments cannot use price and profit to allocate resources because…

Answer 11

Governments have non-revenue concerns
Spending is limited by capacity to tax
Governments are almost perfect monopolies
Governments have mixed motives

Question 12

Governments prepare budgets to

Answer 12

Elaborate on executive’s plans
Facilitate legislative review and approval of plans
Control/review for implementation

Question 13

Control

Answer 13

Fiscal discipline and control

Question 14

Planning

Answer 14

Response to strategic priorities

Question 15

Management

Answer 15

Efficient implementation of the budget

Question 16

Budget cycle includes these four steps

Answer 16

1. Executive preparation
2. Legislative Consideration
3. Execution
4. Audit

Question 17

Circular A-11 is

Answer 17

Federal instructions for budget developed by OMB

Question 18

Agency budget estimates are based on

Answer 18

expected service demands
expected external changes or trends

Question 19

Federal budget elements include

Answer 19

timetable
indication of available funds
priorities
forecasts
service population trends

Question 20

Legislative budget steps

Answer 20

Appropriation bills go to subcommittees
Agencies defend requests in subcommittee hearings
Lower and upper houses approve appropriations
Conference committee approves unified approp bills
Executive signs bills into law

Question 21

T or F, President has line item veto of the budget

Answer 21

False, but most state governors do

Question 22

An appropriation provides

Answer 22

authority for spending budgeted funds

Question 23

T or F, outlays and budget authority are the same

Answer 23

F

Question 24

GAO

Answer 24

Government Accountability Office
Supervises audits of agencies–both performance and financial

Question 25

FASB

Answer 25

Financial Accounting Standards Board, private sector

Question 26

GASB

Answer 26

Government Accounting Standards Board

Question 27

An accounting system consists of

Answer 27

Source documents (receipts, invoices)
Journals (chronological summary)
Ledgers (balances)
Procedures & Controls

Question 28

Public sector accounting focus

Answer 28

cash flows, transparency, control, accountability to consituents

Question 29

Three basic types of fund accounting

Answer 29

Government funds-general, special revenue, debt service, capital and special assessment

Proprietary funds-enterprise, internal service funds

Fiduciary funds-assets led by a trustee–pension funds