NRPA NRPA Financial Management & Budgeting 2 — Questions and Answers
Question 1: Which approach to budgeting requires every expense to be justified from scratch each fiscal year rather than using the prior year as a baseline?
- Zero-based budgeting (Correct answer)
- Incremental budgeting
- Performance budgeting
- Object-based budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting requires managers to justify every line item anew each cycle rather than simply adjusting previous allocations.
Question 2: What is an enterprise fund in a public parks and recreation context?
- A fund used for services that are primarily self-supporting through user fees (Correct answer)
- A fund reserved for capital projects only
- A fund created by private donations to the agency
- A grant fund restricted to environmental programs
Correct answer: A fund used for services that are primarily self-supporting through user fees
Enterprise funds account for operations that are intended to be self-supporting, such as golf courses or recreation centers that charge user fees.
Question 3: Which of the following best describes a fixed cost in parks and recreation programming?
- A cost that remains constant regardless of the number of program participants (Correct answer)
- A cost that increases proportionally with enrollment
- A cost tied directly to consumable supplies per participant
- A cost that varies with seasonal demand
Correct answer: A cost that remains constant regardless of the number of program participants
Fixed costs such as facility rental or staff salaries do not change based on how many participants enroll in a program.
Question 4: What is the primary purpose of a parks and recreation agency establishing a reserve fund?
- To cover unexpected expenses or revenue shortfalls without disrupting operations (Correct answer)
- To fund annual marketing campaigns
- To pay end-of-year staff bonuses
- To finance routine maintenance contracts
Correct answer: To cover unexpected expenses or revenue shortfalls without disrupting operations
Reserve funds provide a financial buffer that allows agencies to manage emergencies or unexpected costs without cutting programs.
Question 5: Which grant type requires a parks agency to match a portion of awarded funds with its own resources?
- Matching grant (Correct answer)
- Formula grant
- Block grant
- Categorical grant
Correct answer: Matching grant
A matching grant requires the recipient to contribute a specified proportion of funds alongside the grant award.
Question 6: What does GASB stand for, and why is it relevant to parks and recreation agencies?
- Governmental Accounting Standards Board; it sets financial reporting standards for public agencies (Correct answer)
- General Accounting and Standards Bureau; it audits federal grants
- Government Agency Support Board; it funds recreation infrastructure
- Grant Administration and Standards Bureau; it reviews park budgets
Correct answer: Governmental Accounting Standards Board; it sets financial reporting standards for public agencies
GASB establishes generally accepted accounting principles (GAAP) for state and local government entities, including parks departments.
NRPA NRPA Financial Management & Budgeting 2
Which approach to budgeting requires every expense to be justified from scratch each fiscal year rather than using the prior year as a baseline?