GAC Budgeting & Financial Management 2

Question 1

Under GASB standards, which budgetary comparison is required to be presented for the general fund and each major special revenue fund?

Accepted Answer

Original and final appropriated budgets vs. actual amounts

Answer

GASB requires governments to present original budget, final appropriated budget, and actual amounts for the general fund and major special revenue funds with legally adopted budgets.

Question 2

A government's budget shows a $500,000 positive budget variance in salaries. This most likely indicates:

Accepted Answer

Actual salary expenditures were less than budgeted

Answer

A positive (favorable) budget variance in expenditures means actual spending came in below the budgeted appropriation amount.

Question 3

Which of the following best describes the purpose of a 'budget stabilization fund' (rainy day fund) in governmental finance?

Accepted Answer

To accumulate reserves for use during revenue shortfalls or economic downturns

Answer

Budget stabilization funds are designed to provide fiscal cushion during revenue shortfalls, helping governments avoid sudden tax increases or service cuts.

Question 4

In governmental budgeting, what is 'encumbrance accounting' primarily used for?

Accepted Answer

To reserve portions of an appropriation for outstanding purchase orders and contracts

Answer

Encumbrance accounting reserves appropriation authority when purchase orders or contracts are issued, preventing overspending before invoices arrive.

Question 5

Which fund type is most commonly used to account for the general operations and services of a governmental unit?

Accepted Answer

General Fund

Answer

The General Fund accounts for most basic governmental services and operations that are not required to be reported in another fund.

(GAC) Governmental Accounting Certification Practice Test

(GAC) Governmental Accounting Certification Practice Test

GAC Budgeting & Financial Management 2