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
Which budgeting approach requires each department to justify every expenditure from zero rather than using the prior year as a baseline?
Answer: Zero-based budgeting
Zero-based budgeting (ZBB) requires justification for every dollar requested, with no automatic carryover from the prior year's appropriations.
A municipality issues a $5 million general obligation bond. Who is ultimately responsible for repaying this debt?
Answer: The full faith and credit of the municipality's taxpayers
General obligation bonds are backed by the full faith and credit of the issuing government, meaning taxpayers are the ultimate guarantors.
What is an encumbrance in governmental accounting?
Answer: A reservation of appropriation for an anticipated expenditure
An encumbrance reserves a portion of an appropriation when a purchase order or contract is executed, before the actual expenditure occurs.
Under GASB standards, what type of fund accounts for activities financed by user charges where the intent is to recover costs through fees?
Answer: Enterprise fund
Enterprise funds account for government activities—like water or utilities—that are financed primarily through user charges in a business-like manner.
A city's budget shows revenues of $10M and expenditures of $11.5M with a $1.5M fund balance draw. What best describes this budget?
Answer: A deficit budget
When expenditures exceed revenues and the difference is covered by drawing down fund balance, the budget is operating at a deficit.
Which document provides a legal appropriation authority for municipal spending during a fiscal year?
Answer: The annual budget ordinance
The budget ordinance, once adopted by the governing body, provides the legal authority for municipal departments to expend funds within appropriated limits.
What does the term 'fund balance' represent in governmental fund accounting?
Answer: The difference between fund assets and fund liabilities
Fund balance is the residual equity of a governmental fund, calculated as total assets minus total liabilities and deferred inflows.