Practice Test Geeks(CMO) Certified Municipal Officer Practice Test
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Financial Management & Budgeting Flashcards

7 cards from real CMO 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 Management & Budgeting flashcards as text

  1. Which budgeting approach requires each department to justify every dollar of expenditure from zero, regardless of prior year spending?

    Answer: Zero-based budgeting

    Zero-based budgeting (ZBB) requires departments to build their budgets from scratch each cycle, justifying all expenditures rather than just changes from the prior year.

  2. A city's internal auditor discovers that the same employee both approves purchase orders and reconciles vendor invoices. This violates which internal control principle?

    Answer: Segregation of duties

    Segregation of duties requires that no single individual control all aspects of a financial transaction to reduce fraud and error risk.

  3. What is the purpose of an actuarial valuation for a municipal pension fund?

    Answer: To calculate the present value of future pension obligations and required contributions

    An actuarial valuation uses demographic and economic assumptions to estimate the present value of future benefit payments and determine the annual required contribution.

  4. Under the modified accrual basis of accounting, revenues are recognized when they are:

    Answer: Available and measurable

    Modified accrual recognizes revenue when it is both measurable (can be reasonably estimated) and available (collectible within the current period or soon enough to pay current liabilities).

  5. A municipality issues tax anticipation notes (TANs) primarily to:

    Answer: Bridge short-term cash flow gaps before property tax receipts arrive

    TANs are short-term borrowings used to maintain operations during the period between the start of the fiscal year and the receipt of property tax collections.

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

    Answer: To provide full public disclosure of a government's financial condition per GAAP

    The ACFR (formerly CAFR) is a GAAP-based document that provides comprehensive financial disclosure for the entire government entity, not just individual funds.

  7. Which GASB concept requires a government to report both short-term funds (governmental funds) and long-term entity-wide information (government-wide statements)?

    Answer: Dual-perspective reporting

    GASB 34 introduced dual-perspective reporting requiring both fund-level statements (modified accrual) and government-wide statements (full accrual) in the same ACFR.