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Exam 12: Budgeting and Performance Measurement

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A major advantage of activity-based costing (ABC)is that it reduces unit cost distortions arising from overhead allocations that often occur using traditional cost accounting systems.

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GASB Concepts Statement No.2 requires state and local governments to include service efforts and accomplishments measures within the comprehensive annual financial report.

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Budgeting is an important part of a manager's planning and control responsibilities in both public and private organizations.

Budget appropriations for governmental funds ordinarily cover only one year,while capital budgets are often multi-year.

Under service efforts and accomplishments (SEA)reporting,outcome measures gauge accomplishments,or the results of services provided,such as the percentage of lane-miles of road in excellent,good,or fair condition.

The type of budgeting that relates input of resources to output of services is zero-based budgeting.

Under GASB standards,every government,regardless of its size,is instructed to prepare a cash budget for each month of the fiscal year.

Total quality management (TQM)seeks to continuously improve an organization's ability to meet or exceed customers' demands,and,as such,is useful in a government setting as well as a business setting.

Balanced scorecards integrate all of the following into a document that can be shared with employees and stakeholders except:

Service efforts and accomplishments (SEA)reporting helps citizens,elected officials,appointed officials,investors and creditors,and other interested parties evaluate the government's performance in the absence of a "bottom line" measure such as exists for for-profit entities.

What budgeting approach requires justification for the inclusion of every activity each year? Briefly describe this method and how it can be effective.

Which of the following statements is not consistent with the GASB's "Budgeting,Budgetary Control,and Budgetary Reporting Principle"?

Efficiency measures,as the term is used in the service efforts and accomplishments (SEA) literature,can be described as:

Popular budgeting approaches employed by governments include incremental budgeting,performance budgeting,program budgeting,planning-programming-budgeting systems,and zero-based budgeting.

The number of lane-miles of road repaired to a specified minimum condition is an example of an:

Under federal guidelines,when is a cost considered reasonable?

Cash planning and budgeting are important in government because the timing of cash inflows often do not necessarily coincide with the timing of cash outflows.

Which of the following has contributed most to governments' increased interest in activity-based accounting?

The following are key terms in Chapter 12 that relate to costing of government services: A.Allowable costs B.Job order costing C.Cost principle D.Cost objective E.Indirect costs F.Direct costs G.Process costing H.Activity-based costing For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition _____ 1. A system that identifies specific costs that drive the cost of service or production activities _____ 2. Costs incurred that cannot be identified specifically with a cost objective _____ 3. Costs that meet specific criteria determined by the resource provider _____ 4. A program,function,activity,award,organizational subdivision,contract,or work unit established for the accumulation of costs _____ 5. System appropriate for recording costs of continuous activities or processes

A common approach to budgeting line-items whereby the current year's budget is constructed by adding or subtracting amounts expected to be required by line items is: