CMM CMM Financial Management & Budgeting 2

Question 1

Which method of capital budgeting analysis calculates the time required for cumulative project savings to equal the initial investment?

Accepted Answer

Payback period

Answer

The payback period method determines how many years it will take for a project's savings or revenues to recover the upfront capital cost.

Question 2

Under GASB Statement No. 34, what is the significance of government-wide financial statements?

Accepted Answer

They provide an accrual-basis view of all governmental and business-type activities

Answer

GASB 34 requires government-wide statements using accrual accounting to show the full economic cost of governmental and business-type activities.

Question 3

Which type of municipal revenue bond is repaid solely from the revenues generated by the financed project?

Accepted Answer

Revenue bond

Answer

Revenue bonds are backed exclusively by the income generated by the specific project (e.g., a utility or toll road) and do not pledge the municipality's taxing power.

Question 4

What is tax increment financing (TIF) primarily used for in municipal government?

Accepted Answer

Funding redevelopment projects using future property tax growth in a designated district

Answer

TIF captures the increase in property tax revenues that results from redevelopment within a designated district to repay bonds or fund improvements in that area.

Question 5

Which purchasing method is most appropriate for a municipality acquiring a unique, highly technical engineering service?

Accepted Answer

Request for proposals (RFP)

Answer

An RFP is used when the scope of work is complex or technical and quality/methodology matter, allowing evaluation of qualifications beyond just price.

(CMM) Certified Municipal Manager Practice Test

(CMM) Certified Municipal Manager Practice Test

CMM CMM Financial Management & Budgeting 2