CGFO Budgeting & Fiscal Policy Management 2

Question 1

Which budgeting approach requires each department to justify every expenditure from zero each fiscal year, regardless of prior budgets?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting (ZBB) requires all expenses to be re-justified from scratch each cycle rather than using prior-year amounts as a baseline.

Question 2

A government entity's budget shows revenues of $10M and expenditures of $11.5M. This situation is best described as a:

Accepted Answer

Budget deficit

Answer

When expenditures exceed revenues in a given period, the result is a budget deficit.

Question 3

Under GASB standards, which fund type is used to account for activities that are financed and operated similarly to private businesses?

Accepted Answer

Enterprise Fund

Answer

Enterprise funds account for government activities that charge fees to users and operate similarly to private-sector businesses.

Question 4

What is the primary purpose of a Comprehensive Annual Financial Report (CAFR) in government budgeting?

Accepted Answer

To provide a complete picture of financial condition to stakeholders

Answer

The CAFR (now often called the Annual Comprehensive Financial Report) provides a thorough and detailed financial overview for accountability and transparency to citizens and oversight bodies.

Question 5

A government's general obligation bond is backed primarily by:

Accepted Answer

The full faith and credit of the issuing government

Answer

General obligation bonds are secured by the issuer's pledge of its full faith, credit, and taxing power, not a specific revenue stream.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Budgeting & Fiscal Policy Management 2