Appendix 4: Answers to Reinforcement Quizzes
Answers to Reinforcement Quiz ñ Section II
1. A state legislature establishes limits on the amount of money that can be
spent on salaries, equipment, utilities, supplies and travel. The legislature
is imposing what kind of accounting controls?
Answer: It is imposing object class controls. Other categories of control
include programs and funds.
2. What is the primary financial control device used in government?
Answer: It is an appropriated budget with an accompanying system of
budgetary accounting. The budget is a law.
3. What is the primary reason for establishing a special fund?
Answer: The purpose of establishing a special fund is to ensure that
specially-identified (or dedicated) revenues are applied to specific
programs. A well-known example is when receipts from gasoline taxes are
deposited into a special fund for highway repairs.
4. Which purpose is not
supported by the budget process?
establishing government priorities
b. communicating public values and policies
reporting results of government operations
d. planning future government expenditures
Answer: (c). Options (a), (b) and (d) are all important purposes fulfilled by
the budget process. The reporting function is a separate phase of the
management cycle, which is not fulfilled by the budget process.
5. Describe the relationship among appropriations, apportionments and
allotments at the national level.
Answer: Appropriations are budget laws passed by Congress. After
appropriations are passed, the OMB apportions budgetary authority to
major departments and components of government. The major
department or component further distributes the budgetary authority within
its own organization (ìdown the chainî) by issuing allotments to its
organizational units.
6. What is meant by reprogramming?
The executive branch asks the legislative branch for approval to
move funds from one appropriation line item to another.
b. The executive branch asks the judicial branch for approval to move
funds from one program to another.
Online version, for personal use only
AGA Study Guide 1, 2016 Edition

Appendix 4: Answers to Reinforcement Quizzes
The legislative branch directs the judicial branch to move funds
from one program activity to another.
d. The judicial branch directs the legislative branch to move funds
from one object class to another.
Answer: (a). The legislative branch has ìpower of the purse.î If the
executive branch wants to reprogram funds, it submits a request to the
legislative branch.
7. Which is not
a phase in the government financial management cycle?
b. reprogramming
d. operations
Answer: (b). Reprogramming is sometimes necessary, but it is not a
specific phase of the management cycle as are auditing, reporting and
8. What limits the practice of government borrowing at various levels of
Answer: At the national level, the debt limit can only be raised by an act
of Congress, which occurs frequently. The national government borrows
for both operational and capital expenses. Most state constitutions and
local charters limit borrowing to capital improvement projects. Most state
and local entities cannot borrow to cover operational expenses. (There are
a few exceptions, such as revenue anticipation notes.) In many cases, a
proposed government debt issue must be put before voters in a
referendum; that is, it must be approved by voters before borrowing can
take place. Also, many bond covenants limit future borrowing by the entity
until the debt issue associated with the covenant is paid off.
9. Which objective is least likely to be achieved through the budget process?
prioritize government expenditures
b. allocate financial resources to various programs
guide operations of organizational units
d. raise ceiling on debt limits
Answer: (d). Options (a), (b) and (c) are objectives fulfilled through the
budget process. Raising the ceiling on government debt requires
legislation action and is not an objective of the budget process. However,
there is a relationship between the budget process and the national debt
limitóthe presidentís budget, submitted to Congress, includes an estimate
on the increase in debt that is needed.
Online version, for personal use only
AGA Study Guide 1, 2016 Edition

Appendix 4: Answers to Reinforcement Quizzes
10.Which is most likely to provide preliminary budget targets to executive
U.S. Government Accountability Office
b. Legislative Services Agency
State Auditing Agency
d. U.S. Office of Management and Budget
(d). It is part of the role of the OMB, as a central management
office, to provide preliminary budget targets to federal agencies. At the
state level, the state budget office or CFO performs a similar role. The
Government Accountability Office is, like the OMB, a central management
office, but it does not provide preliminary budget targets. Many states
have a Legislative Services Agency; the...

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AGA CGFM Study Guide 1: Governmental Environment