A Certain Federal Agency Placed an Order for Office Supplies

question 23

Multiple Choice

A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. At the time the order is placed, what is the net effect on the budgetary and proprietary track accounts?

• A) Budgetary accounts: $14,400; Proprietary accounts: $14,400.
• B) Budgetary accounts: $14,400; Proprietary accounts: $0.
• C) Budgetary accounts: $14,400; Proprietary accounts: $14,800.
• D) Budgetary accounts: $0; Proprietary accounts: $0.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, also known as non-diversifiable risk or market risk.

Market Risk Premium

The higher return an investor foresees from investing in a market portfolio with associated risks as opposed to choosing completely safe assets.

Risky Asset

An asset that carries a higher degree of risk of loss, but also offers a higher potential return.

Risk-free Asset

An investment with zero risk of financial loss, theoretically providing guaranteed returns, such as government bonds.