Final answer:
Federal agencies are required by law to use GAAP for their financial management, which is true. These standards ensure proper financial reporting, and federal budgets support various services funded by taxes.
Step-by-step explanation:
By law, federal agencies must incorporate the accounting standards (GAAP) established for the federal government into their financial management systems. The answer to this statement is A. True. These standards ensure transparent and reliable financial reporting, which is crucial for maintaining public trust and for the effective operation of government.
The federal government's budget, funded primarily by taxes, is vital for supporting various services and programs from which state and local governments also benefit. Moreover, government agencies like the U.S. Department of Education and the U.S. Department of Defense do not face market competition and enjoy consistent funding through federal expenditures. It is important to understand the financial basis upon which federal agencies operate, as they are integral to delivering public sector services underpinned by the taxes collected.