Section 1

Question 1

What are four sources of financing for capital projects?

Answer 1

• notes and bonds for construction and acquisitions;
• intergovernmental grants;
• special assessments, where only those who benefit from the project pay for it; and
• current resources.

Question 2

What is a special assessment?

Answer 2

They are used when the objective is to cause those who benefit from a particular capital project to pay for it. Water and sewer improvements are often funded by special assessments.

Question 3

What is the organizational unit element of the budget?

Answer 3

This refers to the department, division, agency, bureau, board, commission or other organizational unit that is responsible for carrying out governmental operations.

Question 4

What is the function element of the budget?

Answer 4

This refers to one of the major government service classifications. Public safety, social services, income security, community development, public works, education, general government, natural resources and justice are all functional elements of governmental services.

Question 5

What is the program element of the budget?

Answer 5

This may refer to a group of activities within a function, such as tax enforcement, clean air, school lunch program, traffic enforcement, street resurfacing, community-oriented policing, housing rehabilitation and federal work study.

Question 6

What is the category or source element of the budget?

Answer 6

This refers to the type of revenue generated. Revenue sources are usually grouped into taxes, licenses and permits, intergovernmental, charges for services and miscellaneous.

Question 7

What is the character element of the budget?

Answer 7

This refers to the fiscal period that expenditures are presumed to benefit.

Question 8

What is the object class or object element of the budget?

Answer 8

These would be types of items purchased or services obtained, such as personal services, supplies, materials, purchased services, etc.

Question 9

What is the preferred method for assigning cost through cost accounting?

Answer 9

Directly tracing the costs used in the production of outputs.

Question 10

What is the hierarchy of cost accounting methods?

Answer 10

1. Direct tracing
2. Cause and effect
3. Consistent and reasonable basis

Question 11

For each responsibility segment, managerial cost accounting should:

Answer 11

1. define and accumulate outputs, and if feasible, quantify each type of output in units;
2. accumulate costs and quantitative units of resources consumed in producing the outputs; and
3. assign costs to outputs, and calculate the cost per unit of each type of output.

Question 12

What is baseline budgeting?

Answer 12

It is based on the premise that currently provided programs and activities will continue into the next budget period, with perhaps a change in the population that needs to be served, but without any increase or decrease in the level of service.

Question 13

What is program budgeting?

Answer 13

Program budgets consider the proposed expenditures in relation to the programs or services for which the monies would be spent. This gives a manager the greatest degree of flexibility.

Question 14

What is performance budgeting?

Answer 14

Performance budgeting is a process whereby the preparer states that for a defined level of resources, it will provide a defined level of performance. Performance used to be generally defined as agency outputs, with an agency’s program structure linking outputs to long-term objectives.