CCE Budgeting & Financial Management 3

Question 1

In corrections budgeting, 'encumbrance accounting' is used primarily to:

Accepted Answer

Track funds committed to purchase orders before payment is made

Answer

Encumbrance accounting reserves funds against a budget once a purchase order is issued, preventing overspending before actual invoices are paid.

Question 2

A state correctional agency must submit a budget request 18 months before the fiscal year begins. This long lead time is MOST problematic because:

Accepted Answer

Population and cost projections may be inaccurate by the time the budget takes effect

Answer

Long budget lead times create forecast uncertainty, as inmate population, inflation, and program needs may shift significantly before the budget year begins.

Question 3

Which financial document provides a snapshot of an agency's assets, liabilities, and net position at a specific point in time?

Accepted Answer

Balance sheet (statement of net position)

Answer

The balance sheet (or statement of net position in government accounting) shows what an agency owns, owes, and its net financial position at a given date.

Question 4

A correctional agency contracts with a private vendor for medical services. The contract includes a 'cost-plus' pricing model. This means:

Accepted Answer

The agency pays the vendor's actual costs plus a predetermined profit margin

Answer

Cost-plus contracts reimburse actual expenditures and add a profit margin, giving vendors little incentive to control costs but ensuring service availability.

Question 5

Which of the following BEST describes 'proprietary funds' in government accounting as they apply to corrections?

Accepted Answer

Business-like activities such as inmate commissary or canteen operations

Answer

Proprietary funds account for government activities that operate like businesses, charging users for services, such as an inmate commissary or work program.

(CCE) Certified Corrections Executive Practice Test

(CCE) Certified Corrections Executive Practice Test

CCE Budgeting & Financial Management 3