CPWM Financial Planning & Budgeting 4

Question 1

In a modified accrual accounting system used by governmental funds, revenues are recognized when they are:

Accepted Answer

Available and measurable

Answer

Earned, regardless of when cash is received

Answer

Deposited into the government's bank account

Answer

Approved by the governing body's budget ordinance

Question 2

Which revenue source is most subject to economic downturns because it is tied directly to consumer spending?

Accepted Answer

Sales tax

Answer

Property tax

Answer

Special assessments

Answer

Service charges

Question 3

A public works department establishes an internal service fund to manage its vehicle fleet. The primary benefit of this approach is:

Accepted Answer

It centralizes costs and allows cost recovery from user departments via charges

Answer

It eliminates the need for annual budget appropriations for vehicles

Answer

It removes fleet assets from the government's balance sheet

Answer

It qualifies the department for federal fleet management grants

Question 4

The Government Finance Officers Association (GFOA) recommends that local governments maintain an unassigned general fund balance of at least:

Accepted Answer

Two months (approximately 17%) of annual operating expenditures

Answer

5% of annual revenues or expenditures

Answer

One full year of operating expenditures as a rainy-day reserve

Answer

A fixed dollar amount set by state statute

Question 5

Which method of capital asset valuation charges the same depreciation amount each year over the asset's useful life?

Accepted Answer

Straight-line depreciation

Answer

Double declining balance

Answer

Sum-of-the-years'-digits

Answer

Units of production

Question 6

A public works director proposes funding road maintenance through a dedicated special assessment on properties that directly benefit. Compared to general fund appropriations, this approach:

Accepted Answer

Links the cost directly to benefiting property owners and may increase accountability

Answer

Provides less stable funding because assessments can be repealed easily

Answer

Requires annual voter approval to levy the assessment

Answer

Is prohibited by GASB standards for infrastructure maintenance

Question 7

During budget preparation, a public works manager submits a decision package that includes a benefit-cost analysis. The primary purpose of this document is to:

Accepted Answer

Justify a requested program or expenditure by quantifying its value relative to cost

Answer

Satisfy federal environmental review requirements

Answer

Transfer budget authority between fiscal years

Answer

Document historical spending for audit purposes