CGFO Budgeting & Fiscal Policy Management 3

Question 1

A county government collects a hotel occupancy tax whose proceeds can only be used for tourism promotion. Which fund type is most appropriate for these resources?

Accepted Answer

Special Revenue Fund

Answer

Special revenue funds account for proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes.

Question 2

The 'structural deficit' concept in public finance refers to a deficit that:

Accepted Answer

Exists even when the economy is at full employment

Answer

A structural deficit persists even at full employment because baseline government spending systematically exceeds revenues, unlike a cyclical deficit tied to economic downturns.

Question 3

Which budget format organizes expenditures by the goals and objectives the government aims to achieve rather than by line items or departments?

Accepted Answer

Performance budget

Answer

Performance budgets link spending to measurable outcomes and objectives, allowing legislators to evaluate effectiveness rather than just inputs.

Question 4

Under GASB 54, which of the following is a proper classification for fund balance in governmental funds?

Accepted Answer

Restricted and committed

Answer

GASB 54 established a fund balance hierarchy including nonspendable, restricted, committed, assigned, and unassigned — not the old reserved/unreserved terminology.

Question 5

A government adopts a budget where expenditures intentionally equal revenues. This is an example of:

Accepted Answer

A balanced budget mandate

Answer

Many state and local governments operate under balanced budget requirements or mandates that prohibit spending in excess of anticipated revenues.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Budgeting & Fiscal Policy Management 3