CDFM Module 3 key terms

A definite commitment created when a federal agency places an order, signs a contract, awards a grant, or hires personnel that will require payment from appropriated funds now or in the future.

The actual liquidation of an obligation, meaning cash leaves the Treasury to pay a contractor, grantee, or employee. Outlays trail obligations and are what budget execution reports against.

An OMB distribution of appropriated budget authority by time period, activity, or project that controls how much an agency may obligate during a quarter or year.

An agency-level subdivision of an apportionment that delegates spending authority to a program office or subordinate command, giving managers a defined ceiling to obligate against.

An administrative reservation of funds in advance of an obligation, such as an approved purchase request, that prevents the same money from being spent twice.

A federal statute that prohibits obligating or expending funds in excess of or in advance of an appropriation, and requires reporting of violations to the President and Congress.

The three tests every proposed federal expenditure must satisfy: the purpose is authorized by the appropriation, the obligation occurs within the period of availability, and the amount fits within the balance available.

The requirement that funds be obligated only for a legitimate need arising in the period of availability, generally barring purchases that serve a future year's requirement.

The window of time, such as one year, three years, or no year, during which an appropriation may be obligated for its intended purpose before it expires.

Budget authority that is no longer available for new obligations but remains available for a five-year period to record, adjust, and liquidate obligations already incurred.

The canceled account for expired appropriations after the five-year adjustment period closes; remaining balances return to the Treasury and are no longer available for any payment.

Legislation that funds agencies at a specified rate, often the prior year's level, when regular appropriations acts have not been enacted before the fiscal year begins.

An automatic, across-the-board cancellation of budget authority ordered by the President when spending exceeds statutory caps or when PAYGO rules are triggered.

The shifting of funds within an appropriation or between programs to meet a changed requirement, permitted only within thresholds and subject to statutory notification to Congress.

The movement of budget authority from one appropriation to another, which generally requires specific statutory authority and cannot be accomplished by administrative action alone.

Work performed for another organization or customer that pays for it, with the performing activity recording the collections as offsetting receipts to its appropriation.

A revolving fund that finances ongoing business-like operations from customer payments, intended to break even over time rather than to profit.

An account that continuously receives receipts from its own operations and obligates them without further appropriation, supporting cyclical activities such as depot maintenance or supply.

The planning document in which a military department proposes programmed requirements and resources for a future budget cycle, balancing needs against fiscal guidance.

The six-year projection, updated annually, that summarizes approved force structure and resources and links the current budget to long-range planning decisions.

The component's formal budget request to the department, pricing approved program decisions for the budget year and reconciling them with prior planning documents.

A plan for the coming period that estimates expected revenues and expenses for ongoing operations, used to control costs and measure performance against targets.

A budget that adjusts allowed costs to the actual volume of output or workload, allowing fair comparison of spending when activity levels differ from plan.

The practice of comparing actual results with planned or standard amounts and decomposing the difference into causes, such as price and quantity effects, to guide corrective action.

A predetermined unit cost for labor, material, or overhead established from engineering estimates or historical data and used as the benchmark in variance analysis.

A computed rate that allocates indirect costs to products or activities, typically formed by dividing a pool of indirect costs by a chosen base such as labor hours.

The assignment of indirect or shared costs to benefiting programs, products, or organizations using a defensible causal basis such as usage, headcount, or square footage.

The total of direct and indirect costs associated with delivering an output, used to set fees, compare alternatives, and understand the true resource consumption of an activity.

Money already spent that cannot be recovered by any future decision, and therefore should be excluded when evaluating alternatives because it is irrelevant to the choice.

The value of the best alternative forgone when resources are committed to one use, capturing what the organization gives up rather than what it pays.

A future cost that differs between decision alternatives, and thus belongs in the analysis; costs that are the same under every option are excluded.

A calculation of the volume at which total revenue equals total cost, found by dividing fixed costs by the contribution margin per unit.

The amount remaining from each unit's price after variable costs, which contributes first to covering fixed costs and then to generating profit.

A technique that models how changes in volume, price, and cost structure affect operating results, supporting pricing and capacity decisions.

A project control method that integrates scope, schedule, and cost by comparing budgeted value of work performed with actual cost and planned value.

In earned value management, the difference between earned value and actual cost; a positive figure means work is coming in under budget.

In earned value management, the difference between earned value and planned value, expressed in dollars, showing whether work is ahead of or behind plan.

The sum of an investment's future cash flows discounted to today at a chosen rate, minus its initial cost; a positive result suggests the investment adds value.

The rate used to convert future cash flows to present value, reflecting the time value of money and, in public analysis, the cost of government borrowing.

The time required for cumulative cash inflows to recover an initial investment, a simple screening measure that ignores cash flows after the payback point.

A system in which every transaction records equal debits and credits across at least two accounts, keeping the accounting equation in balance at all times.

The master set of accounts that accumulates all transactions by account, serving as the source for financial statements and the trial balance.

The original record of a transaction showing the date, accounts, amounts, and debits and credits, which is then posted to the general ledger.

A listing of all account balances at a point in time used to verify that total debits equal total credits before statements are prepared.

Accounting that recognizes revenue when earned and expenses when incurred, regardless of when cash moves, matching costs to the periods they benefit.

A basis that recognizes revenues when measurable and available and expenditures when the related liability is incurred, commonly used in governmental fund statements.

The rule that expenses be recorded in the same period as the revenues they helped generate, so reported results reflect cause and effect rather than cash timing.

The systematic allocation of a tangible asset's cost over its useful life, spreading the expense across the periods that benefit from the asset's service.

The dollar level at which an acquired item is recorded as a long-lived asset rather than expensed, set by policy and applied consistently.

A lease that transfers substantially all the risks and rewards of ownership to the lessee, who records the asset and a corresponding liability.

A lease that does not transfer ownership risks and rewards, typically recorded as periodic rental expense rather than as an asset and liability.

The difference between a governmental fund's assets and liabilities, reported in categories that reflect how much is spendable and any constraints on its use.

A fund type used to account for tax-supported activities, measured on the modified accrual basis and focused on current financial resources.

A fund type used for business-like activities, accounted for on the full accrual basis and reporting net position, similar to private-sector financial statements.

The accrual-basis financial statement presenting assets plus deferred outflows, less liabilities and deferred inflows, to show the government's net position.

The policies and procedures, including segregation of duties and authorization requirements, designed to safeguard assets and produce reliable financial reporting.

Dividing responsibilities so no single person controls authorization, custody, and recordkeeping for the same transaction, reducing the risk of error or fraud.

A deficiency, or combination of deficiencies, in internal control such that a reasonable possibility exists that a material misstatement will not be prevented or detected timely.

The condition in which an organization can produce complete, accurate, and timely supporting documentation for its financial statements and balances on request.