Practice Test Geeks(CMC) Certified Municipal Clerk Practice Test
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Financial Administration & Budgets Flashcards

7 cards from real CMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Administration & Budgets flashcards as text

  1. Which financial policy ratio is commonly used to measure a government's ability to cover short-term obligations using liquid assets?

    Answer: Current ratio

    The current ratio (current assets ÷ current liabilities) measures short-term liquidity and is a key indicator of a government's ability to meet near-term obligations.

  2. A city council wants to spend $2M on a new park not included in the adopted budget. What action is required?

    Answer: A formal budget amendment or supplemental appropriation ordinance must be passed

    Spending outside adopted appropriations requires a formal amendment or supplemental appropriation approved by the governing body to maintain legal compliance.

  3. Revenue bonds differ from general obligation bonds primarily because they:

    Answer: Are repaid only from revenues of the specific project they finance

    Revenue bonds are secured solely by revenues from the financed project (e.g., a toll road or utility), not by the government's taxing power.

  4. Under GASB 54, which fund balance classification represents amounts constrained by external parties such as creditors or grant grantors?

    Answer: Restricted

    GASB 54 defines 'restricted' fund balance as amounts constrained by externally imposed requirements from creditors, grantors, contributors, or law.

  5. What is the primary purpose of a Comprehensive Annual Financial Report (CAFR/ACFR)?

    Answer: To provide a complete audited picture of a government's financial position

    The CAFR (now ACFR) is the official annual financial report containing audited financial statements that provide a complete view of a government's finances.

  6. A municipality receives a $500,000 federal Community Development Block Grant restricted for housing rehabilitation. In which fund should these revenues be recorded?

    Answer: Special revenue fund

    Special revenue funds account for revenues legally restricted to specific purposes, such as federal grants with use restrictions like CDBG housing funds.

  7. Which financial indicator, if consistently declining over multiple years, most strongly signals fiscal stress in a municipality?

    Answer: Declining unrestricted general fund balance as a percentage of expenditures

    A consistently declining unrestricted fund balance relative to expenditures signals the government is drawing down reserves and may face future budget imbalances.