CMM CMM Financial Management & Budgeting 1

Question 1

Which budgeting approach requires each department to justify all expenditures from a base of zero each fiscal year?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires every department to justify all budget requests from scratch rather than using prior-year allocations as a baseline.

Question 2

What is the primary purpose of a municipal general obligation bond?

Accepted Answer

To borrow money backed by the full faith and credit of the municipality

Answer

General obligation bonds are backed by the taxing authority and full faith and credit of the issuing municipality, making them a primary long-term borrowing tool.

Question 3

Under GAAP for governmental entities, which fund type is used to account for activities supported primarily by taxes and intergovernmental revenues?

Accepted Answer

General fund

Answer

The general fund accounts for most core governmental services funded by taxes, licenses, fines, and intergovernmental revenues.

Question 4

What does a fund balance reserve for 'rainy day' purposes typically represent in municipal finance?

Accepted Answer

Unrestricted reserves to stabilize budgets during revenue shortfalls

Answer

A rainy day fund holds unrestricted reserves that local governments draw on to maintain services when revenues unexpectedly decline.

Question 5

Which financial statement provides a snapshot of a government's assets, liabilities, and net position at a specific point in time?

Accepted Answer

Statement of net position

Answer

The statement of net position (balance sheet equivalent) presents assets, liabilities, and net position as of the reporting date.

(CMM) Certified Municipal Manager Practice Test

(CMM) Certified Municipal Manager Practice Test

CMM CMM Financial Management & Budgeting 1