Appendix 10: Answers to Reinforcement Quiz ñ Section III, Chapter 1
Answers to Reinforcement Quiz ñ Section III, Chapter 1
1. Senior economists in the Executive Office of the President prepare agency
budgets and submit them to Congress for approval. True or false?
Answer: False. The Office of Management and Budget (within the
Executive Office of the President) provides guidance to agencies
regarding assumptions to use in preparing the budget. However, the
agencies prepare the first draft budget and then consult with OMB. After
consultation and revision, the presidentís budget is submitted to Congress
by OMB. Congress then prepares individual appropriations bills. Thus, the
presidentís budget itself is not ìapprovedî or ìrejectedî by Congress.
2. Preparation of the Presidentís Budget:
a.
begins at least 18 months before the budget year.
b. involves economists, agency heads, program officials and the
president.
c.
requires forecasts of economic factors, such as interest and
unemployment rates.
d. requires all of the above.
Answer: (d). Preparation of the budget is a lengthy endeavor, involving
many individuals and factors.
3. The Anti-Deficiency Act is intended to prevent budget deficits. True or
false?
Answer: False. The Anti-Deficiency Act is intended to prevent federal
entities from spending more funds than appropriated, and from exhausting
the appropriation well before the end of the fiscal year.
4. Purposes, for which appropriations may be used, can be found from a
variety of sources. However, the appropriation bills must specify:
a.
the dollar amount provided and time period it remains available.
b. the dollar amount available and the specific ways in which the
amounts may be used.
c.
the dollar amount available for the year and each quarter in the
year.
d. the dollar amount the entity can collect from customers.
Answer: (a). There are a number of constraints on the use of
appropriations. Spending must not exceed authorized levels, spending
must occur within the time period that the funding is made available and
for authorized purposes. However, in some cases, the authorized
purposes are spelled out in other legislationósuch as permanent laws.
Online version, for personal use only
AGA Study Guide 2, 2016 Edition

Appendix 10: Answers to Reinforcement Quiz ñ Section III, Chapter 1
Thus, appropriation bills must specify the time period in which the
appropriation is available to the entity, and the amount available.
5. The U.S. Constitution authorizes money to be borrowed against the credit
of the U.S. government, requires enactment of appropriations before
money can be spent, and requires regular reporting on the receipts and
expenditures of public money. True or false?
Answer: True. These fundamental provisions are found in the
Constitution.
6. In many cases, agencies must have an appropriation, a Treasury warrant
and an apportionment before monies can be spent. True or false?
Answer: True. Annual appropriations must first be apportioned by the
Office of Management and Budget before obligations can be made (and
monies spent).
7. Appropriations bills are traditionally developed:
a.
first in the House of Representatives and then in the Senate.
b. by conference committees composed of members from the House
and Senate.
c.
by the president and approved by the Congress.
d. by lobbyists and submitted to Congress for action.
Answer: (a). Appropriations bills are traditionally initiated in the House.
After a subcommittee drafts a bill, the committee and the whole House, in
turn, must approve the bill, usually with amendments to the original
version. The House then forwards the bill to the Senate, where a similar
review follows.
8. The difference between mandatory and discretionary spending is:
a.
mandatory spending is designated by the president each year and
discretionary spending is not.
b. mandatory spending is controlled by a permanent law and
discretionary spending is controlled by annual appropriations acts.
c. mandatory spending is for emergencies, such as war or natural
disaster, and discretionary spending is not.
d. mandatory spending is not decided upon by the federal agency and
discretionary spending is.
Answer: (b). Mandatory spending is controlled by permanent law, such as
the laws governing Social Security benefits and interest on debt held by
the public. Discretionary spendingóroughly one-third of total spendingóis
controlled by the annual appropriations process.
Online version, for personal use only
AGA Study Guide 2, 2016 Edition

Appendix 10: Answers to Reinforcement Quiz ñ Section III, Chapter 1
9. Congress uses a budget resolution to set overall spending and receipt
goals, and to set the size of the deficit or surplus. True or false?
Answer: True. Known as the budget resolution, the concurrent resolution
on the budget sets levels for total receipts and for budget authority and
outlays, both in total and by functional category. It also sets levels for the
budget deficit or surplus and debt. The...






























































































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AGA CGFM Study Guide 2: Governmental Accounting, Financial Reporting and Budgeting