CGFO Revenue Administration 4

Question 1

A government finance officer discovers that the city's hotel tax ordinance has not been updated in 15 years and the rate is below comparable jurisdictions. This finding belongs to which type of revenue review?

Accepted Answer

Revenue rate benchmark study

Answer

A revenue rate benchmark study compares current rates to those of peer governments to identify potential revenue enhancement opportunities.

Question 2

Under GASB standards, fines and forfeitures are classified as which type of nonexchange revenue?

Accepted Answer

Imposed nonexchange revenue

Answer

Fines and forfeitures are imposed nonexchange revenues because they result from government-imposed assessments rather than exchange transactions.

Question 3

A government's sales tax revenue drops significantly during a recession. This demonstrates that sales tax has high:

Accepted Answer

Revenue elasticity

Answer

High revenue elasticity means a tax's yield fluctuates significantly with changes in economic activity, as sales tax collections closely follow consumer spending.

Question 4

Which principle requires that user fees for enterprise services should not exceed the reasonable cost of providing the service?

Accepted Answer

The cost recovery principle

Answer

The cost recovery principle holds that fees for government services should be limited to recovering the actual cost of service provision.

Question 5

A state government mandates that a county provide a specific service but provides partial funding. How is the revenue from the state classified?

Accepted Answer

Government-mandated nonexchange transaction

Answer

Government-mandated nonexchange transactions occur when a higher-level government requires a lower-level government to perform a service and provides resources for it.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Revenue Administration 4