CPM Government Budgeting & Finance 3

Question 1

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

Accepted Answer

To provide a complete picture of a government's financial condition to stakeholders

Answer

The ACFR (formerly CAFR) is a thorough, detailed financial report that goes beyond minimum GAAP requirements to provide transparency about a government's financial health.

Question 2

When a local government transfers money from its general fund to a capital projects fund, this transaction is recorded as:

Accepted Answer

An interfund transfer out in the general fund and an interfund transfer in the capital projects fund

Answer

Interfund transfers are flows of resources between funds without direct equivalent exchange, recorded as transfers out and transfers in respectively to avoid double-counting revenues and expenditures.

Question 3

Which budget format focuses on organizational goals and measures the outputs and outcomes of government programs?

Accepted Answer

Performance-based budget

Answer

Performance-based budgeting ties funding allocations to program outcomes and results, emphasizing what government achieves rather than simply what it spends money on.

Question 4

A government anticipates a $2 million budget shortfall mid-year. Which action would typically NOT require legislative approval?

Accepted Answer

Implementing a hiring freeze

Answer

Administrative actions like hiring freezes are typically within executive authority, while tax rate changes, bond issuance, and major fund transfers generally require legislative authorization.

Question 5

What does the modified accrual basis of accounting recognize revenue when?

Accepted Answer

It is available and measurable

Answer

Under modified accrual accounting used for governmental funds, revenues are recognized when they are both measurable and available to finance current-period expenditures.

(CPM) Certified Public Manager Practice Test

(CPM) Certified Public Manager Practice Test

CPM Government Budgeting & Finance 3