CMO Financial Management & Budgeting 2

Question 1

A municipality uses a line-item budget but wants to link spending to measurable outcomes. Which budget format best achieves this?

Accepted Answer

Performance-based budgeting

Answer

Performance-based budgeting ties appropriations to measurable program outcomes rather than simply listing expenditure categories.

Question 2

Which financial statement reports a government's assets, liabilities, and net position as of a specific date?

Accepted Answer

Statement of net position

Answer

The statement of net position (balance sheet equivalent) presents assets, deferred outflows, liabilities, deferred inflows, and net position at a point in time.

Question 3

Under GASB standards, what is the primary criterion for including a component unit in a municipality's financial reporting?

Accepted Answer

The municipality is financially accountable for the unit

Answer

GASB Statement No. 14 requires inclusion when the primary government is financially accountable for the component unit.

Question 4

A city council approves $500,000 for road repairs but the public works director spends $520,000. This constitutes a:

Accepted Answer

Over-expenditure of appropriation

Answer

Spending beyond the legally adopted appropriation is an over-expenditure, which is prohibited without a formal budget amendment.

Question 5

What does the term 'fund balance' represent in governmental accounting?

Accepted Answer

Difference between fund assets/deferred outflows and liabilities/deferred inflows

Answer

Fund balance is the residual of fund assets plus deferred outflows of resources minus liabilities and deferred inflows of resources.

(CMO) Certified Municipal Officer Practice Test

(CMO) Certified Municipal Officer Practice Test

CMO Financial Management & Budgeting 2