Section 3, Chapter 5

Question 1

What are revenues?

Answer 1

inflows that the government demands, earns or receives from donation

Question 2

What 2 categories are revenues classified into?

Answer 2

1. ) exchange revenue

2. ) nonexchange revenue

Question 3

What is exchange revenue?

Answer 3

earned revenue - arises when a government provides goods or services to the public or another entity for a price.

Question 4

What is nonexchange revenue?

Answer 4

arises from the governments power to demand payment from the public in the form of taxes, duties, fines and penalties. Donations are also nonexchange revenue.

Question 5

When are accounts receivable established?

Answer 5

when a federal entity has a claim to cash or other assets from entities.

Question 6

What is a bad debt expense?

Answer 6

when credit losses are more likely than not

Question 7

What are the three factors to consider when estimating a loss?

Answer 7

1. ) debtors ability to pay
2. ) debtors payment record and willingness to pay
3. ) probable recovery of amounts from secondary sources, such as a lein

Question 8

What are entity assets?

Answer 8

assets available for use by the entity itsef

Question 9

What are nonentity assets?

Answer 9

assets the entity is holding in a custodial capacity.

Question 10

What are advances?

Answer 10

cash outlays made by a federal entity to its employees, contractors, grantees or others to cover all or part of the recipients anticipated expenses, or as advance payments for the costs of goods or services the entity acquires.

Question 11

What are prepayments?

Answer 11

payments made by a federal entity to cover certain periodic expenses before those expenses are incurred.

Question 12

How are advances and prepayments recorded?

Answer 12

as assets, until the conditions of the advance or prepayment are satisfied.

Question 13

What values must be used to determine and recognize the cost today of estimated cash flows occurring in the future?

Answer 13

present values

Question 14

What is present value?

Answer 14

the value of future cash flows discounted to the present time at a defined interest rate.

Question 15

What is loan guarantee?

Answer 15

any guarantee, insurance, or other pledge with respect to the payment of all or part of the principal or interest on any debt obligation of a non federal borrower to a non federal lender

Question 16

What are the three types of treasury securities??

Answer 16

1. ) nonmarketable par value treasury securities
2. ) market based treasury securities
3. ) marketable treasury securities

Question 17

What are nonmarketable par value treasury securities?

Answer 17

special series debt securities that the US treasury issues to federal entities at face value (par value). Securities are redeemed at face value on demand - thus investing entities recover the full amount invested.

Question 18

What are market based treasury securities?

Answer 18

debt securities the US Treasury issues to federal entities without statutorily determined interest rates. Prices and interest rates mirror the terms of marketable treasury securities.

Question 19

What are marketable treasury securities?

Answer 19

incudes treasury bills, notes and bonds. Initially issued by the treasury to the marketplace and can then be bought and sold on securities exchange markets.

Question 20

When should a security be recognized as an asset?

Answer 20

upon acquisition

Question 21

What amount should be recognized as an asset?

Answer 21

the securities acquisition cost.

Question 22

What amount should be recognized as an asset if the acquisition is made in exchange for nonmonetary assets?

Answer 22

the acquired securities should be recognized at the fair market value of the securities acquired or the assets given up - whichever is more definitively determinable.

Question 23

How should the security be recorded as an asset if the acquisition cost is different than face value (par)?

Answer 23

recorded at the securities face value, plus or minus the premium or discount on the investment.

Question 24

What is a discount?

Answer 24

the excess of the securities face value over its purchase price.

Question 25

What is a premium?

Answer 25

the excess of the purchase price over the securities face value.

Question 26

How should premiums and discounts be reported?

Answer 26

amortized over the life of the treasury security using interest method.

Question 27

What is Operating Materials and Supplies?

Answer 27

OM&S - goods that have been purchased for use in normal operations

Question 28

What is inventory?

Answer 28

tangible personal property that is held for sale, used in the production of other goods to be sold, or in the process of being developed for sale.

Question 29

What accounting method are OM&S and Inventory recorded under?

Answer 29

consumption method

Question 30

What 2 things does the consumption method require?

Answer 30

1. ) recognition of the historical cost - including all cost incurred to bring the item to its current condition and location - as an asset when received by entity.
2. ) use of flow assumptions to assign costs to items consumed - must use FIFO or weight average

Question 31

What is FIFO?

Answer 31

First in, first out. assumes the first items added to inventory are the first to be used

Question 32

What is weighted average?

Answer 32

placed the same per item cost on each item at a point in time.

Question 33

Which inventory method is not permitted for federal entities?

Answer 33

LIFO

Question 34

What are stockpiles?

Answer 34

strategic and critical materials held due to statutory requirements for use in national defiense, conservation, or national emergencies.

Question 35

How are stockpile materials recorded?

Answer 35

as an asset upon receipt and as an expense upon disposal.

Question 36

Where is seized property, other than monetary values, reported??

Answer 36

in the notes

Question 37

What are commodities?

Answer 37

items acquired, held, sold or otherwise disposed of to stabilize or support market prices.