Financial Management & Budgeting Flashcards

A school district receives an unexpected state grant mid-year. Which budget process should be used to incorporate these funds?

Answer: Budget amendment

A budget amendment is the formal process for modifying an adopted budget to reflect new revenue sources such as unexpected grants.

Which financial statement shows a school district's assets, liabilities, and net position at a specific point in time?

Answer: Statement of net position

The statement of net position (balance sheet equivalent) presents assets, liabilities, and net position as of a specific date.

An administrator notices that salary expenditures are 60% spent after only 40% of the fiscal year. What is the most appropriate immediate action?

Answer: Conduct a variance analysis to identify the cause

Variance analysis identifies whether the overspending reflects timing differences, errors, or a real budget problem before taking corrective action.

In governmental accounting, which fund type is used to account for resources restricted for a specific purpose by external parties?

Answer: Special revenue fund

Special revenue funds account for proceeds restricted or committed for specific purposes other than debt service or capital projects.

What does the term 'encumbrance' refer to in school district accounting?

Answer: Funds reserved for outstanding purchase orders

Encumbrances represent commitments related to unperformed contracts or purchase orders, reserving budget authority before the actual expenditure occurs.

Which approach to school budgeting requires every program to justify its entire budget from zero each cycle, rather than building from the prior year?

Answer: Zero-based budgeting

Zero-based budgeting requires each program to justify all expenditures from scratch each budget cycle, not just increases over the previous year.

A school principal is managing a school-level budget. Which practice best demonstrates effective budget stewardship?

Answer: Monitoring expenditures monthly against the approved budget

Regularly monitoring expenditures against the budget allows administrators to identify variances early and make informed financial decisions.