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

Modified accrual recognizes revenues when they are both measurable (can be estimated) and available (collectible within the current period or shortly after).

Question 2

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

Accepted Answer

Sales tax

Answer

Sales tax collections decline sharply during recessions as consumers reduce spending, making it a volatile revenue source compared to property taxes.

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

Internal service funds pool shared resources and allocate costs to user departments through charges, promoting accountability and efficient resource use.

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

GFOA's best practice guideline recommends a minimum unrestricted general fund balance of two months (approximately 16.7%) of operating revenues or expenditures.

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

Straight-line depreciation divides the depreciable cost equally across all years of useful life, producing a consistent annual charge.

(CPWM) Certified Public Works Manager Practice Test

(CPWM) Certified Public Works Manager Practice Test

CPWM Financial Planning & Budgeting 4