CPRP Financial Management and Budgeting 4

Question 1

A park district receives an unexpected $50,000 donation restricted to playground equipment. How should this be classified in the budget?

Accepted Answer

Restricted fund revenue

Answer

Donations with donor-imposed restrictions must be classified as restricted fund revenue and spent only for the designated purpose.

Question 2

Which budgeting approach requires each department to justify every expenditure from zero rather than using the prior year as a baseline?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts from a 'zero base' and requires justification for all expenses regardless of prior year spending.

Question 3

A recreation center's cost recovery ratio is 65%. What does this mean?

Accepted Answer

65% of program costs are covered by direct program revenues

Answer

A cost recovery ratio of 65% means that 65% of the program's direct costs are offset by revenues generated from that program.

Question 4

Which of the following is an example of a variable cost in parks and recreation operations?

Accepted Answer

Supply costs per program participant

Answer

Variable costs change in proportion to activity levels; supply costs per participant increase as enrollment increases.

Question 5

What is the purpose of an encumbrance in government accounting?

Accepted Answer

To reserve funds for an anticipated purchase before payment is made

Answer

An encumbrance reserves budget authority when a purchase order is issued, preventing those funds from being committed elsewhere.

CPRP - Certified Park and Recreation Professional Practice Test