Study Set 1 Flashcards
1
Q
A capital Budget adopted by Resolution of the governing body authorizes a municipality to:
A
Capital Budgets are only used to plan for the future
2
Q
The recording of depreciation on general fixed assets is presented in the: a. Current Fund b. General Fixed Asset Account Group c. Trust Other Fund. d. General Capital Fund e. none of the previous
A
e. none of the previous
3
Q
Which of the following is not part of the Annual Debt Statement:
a. gross debt and deduction made thereto
b. net debt
c. signature of RMA
d. Net debt as a percentage of the average equalized value
A
c. only signature of the CFO required
4
Q
Municipal Gross debt on the ADS includes:
a. Regional School Debt
b. Tax Anticipation Notes
c. Lease agreements structured as serial debt
d. emergency notes.
e. none of the previous
A
a. Regional School Debt.
Debt Statements only care about debt issued under NJSA 40A:2
Other answers are under NJSA 40A:4
5
Q
Which of the following debt instruments would be included in gross debt when filing the annual debt statement?
a. tax anticipation notes
b. special emergency notes
c. bond anticipation notes
d. utility revenue notes
e. all of the previous
A
c. BANs
Debt Statements only care about debt issued under NJSA 40A:2
Other answers are under NJSA 40A:4
6
Q
A supplemental debt statement is required to be on file prior to the authorization of statutory debt except when the following type of debt is authorized:
a. net refunding debt
b. bond anticipation notes
c. tax anticipation notes
d. self-liquidating utility bonds
A
c. Tax Anticipation Notes
Tax Anticipation Notes are issued under NJSA 40A:4
They do not show up on the ADS either.
7
Q
The Statutory net debt percentage for a municipality in the State of NJ is:
A
3.5% NJSA 40A:2-6
8
Q
The permitted statutory net debt percentage for a county without approval of the local finance board is limited to :
A
2% NJSA 40A:2-6
9
Q
General Serial Bonds Payable $2,000,000.00
Bond Anticipation Notes $2,000,000.00
Deferred Charges to Future Taxation – Unfunded $1,000,000.00
Type I School Bonds $2,000,000.00
Average Equalized Valuation Basis $200,000,000.00
What is the maximum amount of borrowing power for the City of Anyplace as calculated in accordance with NJSA 40:2-6?
a. $4,000,000.00
b. $7,000,000.00
c. $8,750,000.00
d. $10,000,000.00
A
b. 200,000,000*.035=7,000,000
Take 3.5% of average equalized value
10
Q
General Serial Bonds Payable $2,000,000.00
Bond Anticipation Notes $2,000,000.00
Deferred Charges to Future Taxation – Unfunded $1,000,000.00
Type I School Bonds $2,000,000.00
Average Equalized Valuation Basis $200,000,000.00
What is the remaining amount of borrowing power for the City of Anyplace as calculated in accordance with NJSA 40:2-6
a. $0.00
b. $1,000,000.00
c. $2,000,000.00
d. $3,000,000.00
A
D. $3,000,000
Muni= 3.5% of equalized value.
200,000,000*.035=7,000,000
Less debt (General Serial Bonds & BANs)
$700,000,000-2,000,000-2,000,000= 3,000,000
11
Q
A public hearing on a bond ordinance must be held at least:
a. Ten days after introduction
b. One week prior to day of hearing
c. Twenty-eight days after introduction
d. Three days prior to day of hearing
A
A. Ten days after introduction NJSA 40A:2-17b
12
Q
A municipal ordinance shall take effect:
a. 20 days after final adoption
b. 15 days after final adoption
c. 20 days after first publication after final adoption
d. 15 days after first publication after final adoption
A
c. 20 days after first publication after final adoption
NJSA 40A:2-18
13
Q
Preliminary planning expenses may be made directly from the Capital Improvement Fund provided that such expenditures are authorized by:
a. A bond ordinance
b. A resolution
c. The Division of Local Government Services
d. The Local Finance Board
A
b. Resolution
Requirements of Audit 2.43
14
Q
Except for preliminary costs, moneys expended from the Capital Improvement Fund shall be made by:
a. An appropriation in the annual budget
b. An appropriation through an adopted ordinance
c. Resolution of the governing body
d. Dedication by rider
A
B. An appropriation through an adopted ordinance
NJSA 40A:2-3
15
Q
The appropriations for “Down Payment on Improvements” and “Capital Improvement Fund” may be used for:
a. Direct expenditures without the benefit of an ordinance
b. Preliminary expenses for bondable projects
c. A means of financing Capital Ordinance Appropriations
d. Specific capital purposes upon adoption of the budget
A
c. A means of financing Capital Ordinance Appropriations
Requirements of Audit 2.4
16
Q
Interest expense incurred on obligations issued to finance the cost of improvements during construction may be capitalized as part of the cost of the project until:
a. The project is certified as complete by the engineer
b. The end of the fiscal year following completion of the project
c. Twelve months after completion of the project
d. Interest cannot be capitalized under the Local Bond Law
A
b. The end of the fiscal year following completion of the project
NJSA 40A:2-20
17
Q
Repairs to equipment which are purchased with capital funds may be bonded, provided that the repairs prolong the useful life for an additional:
a. Three years
b. Five years
c. Ten years
d. None of the above. Repairs are not a bondable expense
A
b. five years
NJSA 40A:2-22(g)(3)
18
Q
A bond ordinance adopted by a local unit, in most cases, requires a down payment which is not less than 5% of the amount of obligations authorized. Said sum must have been made available prior to the adoption of the bond ordinance. Which of the following is NOT a permissible source for down payment
a. By provision in a previously adopted budget of the local unit
b. By capital surplus
c. By emergency appropriation
d. From moneys then held by the local unit and previously contributed for such purpose other than by the local unit
A
B – By Capital Surplus
NJSA 40A:2-11 – The Capital Surplus could have bonded money in it
19
Q
On July 1, 1994, Grove City adopted a bond ordinance for improvements to its municipal building. The total amount of the bond ordinance was $2,000,000.00 and will be accounted for in the City’s General Capital Fund. What is the maximum amount of bonds and notes that could have been authorized pursuant to Local Bond Law?
a. $1,906,750.00
b. $1,900,000.00
c. $1,904,762.00
d. $1,905,000.00
A
C – $2,000,000 / 1.05 = $1,904,762 (If asked for the minimum down payment, $1,904,762 x 5% = $95,238) (The check is then $1,904,762 + $95,238 = $2,000,000)
??????-WHY
20
Q
The following information was abstracted from the Borough of Pine’s 2015 Annual Financial Statement:
Bond Anticipation Notes Outstanding $1,000,000.00
Original Amount of Notes Issued $500,000.00
Original Date of Issue October 1, 2013
Date of Maturity October 1, 2016
Maximum Period of Usefulness 10.5 years
Since it is contemplated that this note will be renewed in 2016, calculate the first legally payable installment to be budgeted.
a. $ 25,000.00
b. $ 50,000.00
c. $100,000.00
d. $125,000.00
A
A. $25,000
$500,000 / [(10.5 x 2) – 1] = $500,000 / 20 = $25,00
Must do a minimum pay down after 3 yrs
Calculation is Useful life times 2 less 1.
21
Q
A local unit may borrow and issue bond anticipation notes pursuant to the local bond law. What would be the maximum maturity of a note issued January 1, 2012?
a. January 1, 2013
b. May 1, 2013
c. January 1, 2022
d. May 1, 2022
A
A. Janaury 1, 2013
BANs renew 1 year from due date
NJSA 40A:2-8.1
22
Q
Bond Anticipation Notes must be permanently funded at the end of how many years?
a. 3
b. 5
c. 10
d. 12
A
c. 10 years
NJSA 40A:2-8.1
23
Q
Whenever a municipality receives a premium on the Sale of General Capital Bonds issued, that premium shall be:
a. Amortized over the life of the bond issue
b. Recorded as an increase in General Capital Fund Balance
c. Transferred to the Debt Service Fund
d. Recorded in the Current Fund as an Other credit to income
A
B – Recorded as an increase in General Capital Fund Balance
Requirements of Audit (2.45)
24
Q
Accrued interest received on serial bonds in the General Capital Fund is reported as a:
a. Recorded as Capital Fund Balance
b. Revenue in the Current Fund
c. Deferred asset in the Capital Fund
d. Deferred asset in the Current Fund
A
c. Revenue in the Current Fund
Requirements of Audit (2.15)
25
Interest accruing on the sale of general obligation bonds which are dated prior to July 1 of the fiscal year must be:
a. Recorded as Current Fund revenue
b. Recorded as a reserve to pay interest on the bonds
c. Recorded as an increase to General Capital fund balance
d. Recorded as a revenue in the Debt Service Fund
B – Recorded as a reserve to pay interest on the bonds
Requirements of Audit (2.15)
26
Interest earned and received on investments and deposits in the General Capital Fund is treated as revenue in the:
a. General Capital Fund
b. General Capital Fund but transferred to the Debt Service Fund
c. Debt Service Fund
d. Current Fund
e. Either C or D at the discretion of the governing body
D – Current Fund
Requirements of Audit (2.14)
27
Which of the following statements is generally true relative to the maturities of bonds per NJSA 40A:2-26?
a. All bonds shall mature in annual installments
b. No annual installments shall exceed the smallest prior installment by more than 100%
c. All bonds shall mature within their period of usefulness as stated in the bond ordinance
d. All of the above
e. None of the above
D – All of the above
NJSA 40A:2-26
28
The County of Cork is anticipating a $10,000,000.00 bond sale. What is the maximum amount of premium that may be offered for the sale of these bonds?
a. $1,000.00
b. $1,500.00
c. $2,000.00
d. 1% of the total bond offered at sale
e. 2% of the total bond offered at sale
A. $1,000.00
A – NJSA 40A:2-32(d)
29
Where would a lease liability with a County Improvement Authority be reported in the financial statements of a municipality?
a. General Capital Fund
b. Current Fund
c. Notes to the Financial Statement
d. A lease liability of this type should not be reported
A. General Capital Fund
????
30
Trust assessments are derived from:
a. General improvements
b. Local improvements
c. Prospective improvements
d. Prospective assessments
B. Local Improvements
NJSA 40A:56-21
31
The payment of interest on assessment debt would be recorded as an expenditure in the:
a. Assessment Trust Fund
b. Current Fund
c. Capital Fund
d. Trust Other Fund
B – Current Fund
Requirements of Audit (2.54)
32
The payment of bond principal on the utility assessment debt would be recorded as an expenditure in the budget of the:
a. Utility Assessment Trust Fund
b. Utility Operating Fund
c. Utility Debt Service Fund
d. Utility Capital Fund
A. Utility Assessment Trust Fund
Requirements of Audit (2.49) – Trust Assessments exist to pay off bonds
33
When trust assessments are received, the cash collected is first applied to:
a. Principal of assessment bonds
b. Finance assessment improvements
c. The interfund between the General Capital Fund and the Assessment Trust Fund
d. Reserve for assessments and liens
A – Principal of assessment
NJSA 40A:56-36
34
The proceeds from the sale of assessment bonds would be recorded:
a. As an Other financing source in the Assessment Trust Fund
b. As an Other financing source in the General Capital Fund
c. As an increase of general bond payable in the General Capital Fund
d. As an increase of assessment bonds payable in the Assessment Trust Fund
e. As an interfund payable in the General Capital Fund
c. As an increase of general bond payable in the General Capital Fund
35
Whenever a municipality receives a premium on the sale of Assessment bonds issued, the premium shall be:
a. Recorded as an increase in General Capital Fund Balance
b. Recorded in the Current Fund as an Other credit to income
c. Recorded as an c in Assessment Trust fund balance
d. Recorded as a reserve to pay debt service in the Assessment Trust Fund
A – Recorded as an increase in General Capital Fund Balance
Requirements of Audit (2.45)
36
Trust Assessment fund balance may be anticipated as a revenue in the:
a. Dedicated assessment budget
b. Current Fund budget
c. General Capital Fund
d. Trust Fund via dedication by rider mechanisms
B – Current Fund budget
Requirements of Audit (2.50)
37
Utility funds account for operations of municipal owned utilities and enterprises. Certain rules must be followed in order to maintain the integrity of the fund concept. Which of the following is NOT an accounting or budgeting rule to be followed:
a. Surplus, which is anticipated in the general budget as a result of the current year’s utility operation, may be paid to Current Fund only if net profits for such year permits.
b. NJSA 40A:4-35 makes it mandatory that any deficit resulting from utility operations in any such year, not currently provided for, must be budgeted in the next fiscal year.
c. Surplus which has been accumulated in previous years and directly anticipated in the Current Fund budget may be paid over to the extent anticipated without reservation.
d. Anticipated Deficit (General Budget) as shown in the utility budget revenues, is to be realized in an amount equal to the anticipated deficit in operations for the year but may be in excess of the amount appropriated for such deficit in the general budget.
d. Anticipated Deficit (General Budget) as shown in the utility budget revenues, is to be realized in an amount equal to the anticipated deficit in operations for the year but may be in excess of the amount appropriated for such deficit in the general budget.
Requirements of Audit (2.52)
38
A utility fund deficit in operations shall be:
a. Raised by an emergency
b. Raised by a special emergency
c. Raised in the budget of the succeeding year
d. Closed out to operations of the current year
c. Raised in the budget of the succeeding year
NJSA 40A:4-35
39
The calendar year 2012 municipal spending cap index rate for a dedicated utility budget is:
a. 2.0%
b. 2.5%
c. 3.0%
d. None of the above
d. none of the above.
No cap in utility fund
40
Encumbrances outstanding at year end in a utility operating fund are reported in the Statement of Operations and Changes in Operating Surplus as:
a. As an element of expenditures
b. As an element of Appropriation Reserves
c. As a reservation of Utility Fund Balance
d. Are not reported in this statement
a. As an element of expenditures
41
Appropriations canceled by resolution of the governing body are reported in the Utility Fund Statement of Operations and Changes in Fund Balance as:
a. An element of Miscellaneous Revenue
b. An element of Other Credits to Income
c. A deferred expenditure
d. Are not reported in the statement
e. All of the above
f. None of the above
d. Are not reported in the statement
42
Interest on Utility Fund bonds and notes is provided for in the annual budget on a:
a. Cash basis
b. Accrual basis
c. Modified accrual basis
d. Pay as you go basis
b. Accrual basis
| Accrued Interest
43
Information relating to the Town of South Jersey Sewer Utility is as follows:
```
Outstanding Serial Bonds at 12/31/09 $3,000,000
Interest Rate (Payable 4/1 and 10/1) 5.00%
2010 Maturity (10/1/10) $500,000
2011 Maturity (10/1/11) $500,000
```
The minimum appropriation for interest on bonds that must be included in the 2011 Water utility Operating Budget is:
a. $118,750
b. $125,000
c. $150,000
d. $156,250
A. $118,750
($3,000,000 - $500,000) x 5% = $125,000
($3,000,000 - $1,000,000) x 5% x (1/4) = $25,000
($3,000,000 - $500,000) x 5% x (1/4) = ($31,250)
$118,750
Accrued Interest at 12/31/2011 plus Actual 2011 Interest less Accrued Interest at 12/31/2010
44
Which of the following statements is incorrect with respect to accounting for locally owned utilities?
a. The account “Fixed Capital Authorized” is increased by the costs which are accrued to “Fixed Capital” for those improvements which have been completed.
b. Interfund accounts receivable are not to be offset by a collateral reserve account.
c. Interfund accounts receivable are to be pledged to liabilities and operating surplus.
d. If the utility operated at a deficit, and if after December 31 of each year the utility appropriation reserves are cancelled, to the extent of the deficit due or received from the Current Fund, such amount is due to the Current Fund.
a. The account “Fixed Capital Authorized” is increased by the costs which are accrued to “Fixed Capital” for those improvements
Requirements of Audit (2.53)
45
When a municipality operates a water and sewer utility where would depreciation be recorded on fixed assets acquired with bond funds?
a. Utility Capital Fund
b. Utility Operating Fund
c. General Fixed Assets Account Group
d. None of the above
d. None of the above
No depreciation record in the muni fund
46
Ridge Township operates a Water and Sewer Utility. During the year ended June 30, 1994, Ridge properly budgeted and paid $1,000,000 in bond principal and $40,000 in bond interest. To record the $1,000,000 in bond principal paid, the Utility Capital Fund should:
a. Debit bonds payable and credit deferred charges to future taxation
b. Debit expenditures and credit reserve for amortization
c. Debit bonds payable and credit reserve for amortization
d. Debit bonds payable and credit fixed assets authorized and uncompleted
c. Debit bonds payable and credit reserve for amortization
47
Vern Township operates a Swim Pool utility. During the year ended June 30, 2001, Vern properly budgeted and paid $2,000,000 in bond principal and $40,000 in bond interest. To record the $2,000,000 in bond principal paid, Utility Capital Fund should:
a. Debit bonds payable and credit deferred charges to future taxation
b. Debit expenditures and credit reserve for amortization
c. Debit bonds payable and credit reserve for amortization
d. Debit bonds payable and credit fixed assets authorized and uncompleted
c. Debit bonds payable and credit reserve for amortization
48
Which of the following is the appropriate set of journal entries to record the adoption of a capital improvement ordinance, funded by the Capital Improvement Fund, in a self-liquidating municipal utility?
a. Debit Capital Improvement Fund
Credit Improvement Authorizations – Funded
b. Debit Capital Improvement Fund
Credit Fixed Capital Authorized and Uncompleted
c. Debit Fixed Capital Authorized and Uncompleted
Debit Capital Improvement Fund
Credit Improvement Authorizations – Funded
Credit Reserve for Amortization
d. Debit Fixed Capital Authorized and Uncompleted
Debit Capital Improvement Fund
Credit Improvement Authorizations- Funded
Credit Deferred Reserve for Amortization
d. Debit Fixed Capital Authorized and Uncompleted
Debit Capital Improvement Fund
Credit Improvement Authorizations- Funded
Credit Deferred Reserve for Amortization
49
Which of the following statements is false with respect to making a Down Payment as required by NJSA 40A:2-11 when applied to a municipally owned and operated utility?
a. Down payments are not required in the case of a self-liquidating purposes when the utility has been self-liquidating in accordance with said provision in the local bond law.
b. When a utility ordinance contains a down payment provision, it may be taken from the current year’s budget appropriation. Under this condition the down payment is always debited to “Down Payments on Capital Improvements Due from Utility Operating Fund.”
c. In those cases where the utility fund is not self-liquidating in accordance with the provision of statute, a down payment is required.
d. When a utility ordinance contains a down payment provision, it may be taken from a reserve that had been provided by prior year’s budget appropriations. Under this condition the down payment is debited to a “Reserve for Down Payments” or “Capital Improvement Fund.”
b. When a utility ordinance contains a down payment provision, it may be taken from the current year’s budget appropriation. Under this condition the down payment is always debited to “Down Payments on Capital Improvements Due from Utility Operating Fund.”
50
A local unit may borrow and issue Utility Bond Anticipation Notes pursuant to the local bond law. What is the maximum renewal for a bond anticipation note?
a. 1 year
b. 3 years
c. 10 years
d. Until permanently financed
c. 10 years
Renewal, not maturity (Maturity would be 1 year)
51
Which of the following revenue sources is utilized in a determination of whether a municipal public utility is deemed to be self-liquidating?
a. Utility Surplus
b. Anticipated Deficit – General Budget
c. Escrow Deposits for Utility Connections
d. Premium on Sale of Utility Notes
e. None of the above
a. Utility Surplus
NJSA 40A:2-45
52
Which of the following revenue sources is NOT utilized in a determination of whether a municipal public utility is deemed to be self-liquidating?
a. Utility Surplus
b. Anticipated Deficit – General Budget
c. User Charges
d. Interest on Investments and Deposits
B – Anticipated Deficit – General Budget
NJSA 40A:2-45
53
Which of the following is utilized in the calculation of a self-liquidating purpose of a municipal utility?
a. Capital Improvement Fund
b. Debt Service
c. Anticipated Deficit – General Budget
d. Capital Outlay
e. All of the above
B – Debt Service
NJSA 40A:2-45
54
Which of the following is not deducted when calculation of self-liquidating purpose of a utility is made?
a. Capital Improvement Fund
b. Payment of Bond Principal
c. Deficit in Assessment Cash – Dedicated Assessment budget
d. None of the above
A – Capital Improvement Fund
Requirements of Audit (2.54)
55
```
1995 Budget After Modification:
Admission Fee Revenues $800,000
Appropriations:
Salaries and Wages 700,000
Other Expenses 150,000
Capital Outlay 150,000
1995 Cash Collection of Fees 900,000
1995 Appropriations Ledger Summary:
Other Capital
Salaries Expenses Outlay
Expenditures by cash 650,000 100,000 100,000
Accounts payable 0 25,000 0
Encumbrances 0 25,000 0
```
The amount of Excess or Deficit in Revenues for self-liquidating purposes that would be reported on the 1995 Annual Debt Statement is:
a. $100,000 Deficit in Revenues
b. $0
c. $50,000 Excess in Revenues
d. $100,000 Excess in Revenues
C – $900,000 - $700,000 (S&W) - $150,000 (OE) = $50,000 Excess in Revenues
56
In preparing a municipality’s Annual Debt Statement certain deductions are allowed in the calculation of self-liquidating purpose per NJSA 40A:2-45. Which one of the following is permitted?
a. Capital Improvement Fund
b. Capital Outlay
c. Deficits in Assessment Cash – Dedicated Assessment Budget
d. Deferred Charges – Emergency Authorization
e. None of the above
C – Requirements of Audit (2.54)
57
Serial Bonds Outstanding – December 31, 2009 $2,500,000
Serial Bonds Authorized but Not Issued – December 31, 2009 $500,000
Total Cash Received from Fees, Rents & Other Charges $225,000
Appropriation Balance Canceled – Interest $500
Final Appropriations:
Operating & Maintenance Cost $230,000
Debt Service for Bonds $100,000
Debt Service for Interest $10,500
Deficit Anticipated Water Utility Assessment Budget $10,000
Capital Improvement Fund $5,000
When preparing the 2009 Annual Debt Statement, Jersey Shore would capitalize which deficit?
a. $120,000
b. $125,000
c. $125,500
d. $130,000
A – The smaller deficit of the self-liquidating calculation and the debt service calculation is capitalized
Self-liquidating = $225,000 + $500 - $230,000 - $100,000 - $10,500 - $10,000 = ($125,000)
Debt Service = $500 - $100,000 - $10,500 - $10,000 = ($120,000)
58
Serial Bonds Outstanding – December 31, 2009 $2,500,000
Serial Bonds Authorized but Not Issued – December 31, 2009 $500,000
Total Cash Received from Fees, Rents & Other Charges $225,000
Appropriation Balance Canceled – Interest $500
Final Appropriations:
Operating & Maintenance Cost $230,000
Debt Service for Bonds $100,000
Debt Service for Interest $10,500
Deficit Anticipated Water Utility Assessment Budget $10,000
Capital Improvement Fund $5,000
When preparing the 2009 Annual Debt Statement, Jersey Shore’s deduction applicable to bonds and notes for self-liquidating purposes would be?
a. $600,000
b. $2,400,000
c. $2,500,000
d. $3,000,000
A – $2,500,000 + $500,000 – ($120,000 * 20) = $3,000,000 - $2,400,000 = $600,000
59
```
Fixed Capital $500,000
Fixed Capital Authorized and Uncompleted $500,000
Utility Revenue Notes $100,000
Serial Bonds Payable $100,000
Bond Anticipation Notes $200,000
Reserve for Amortization $200,000
Reserve for Deferred Amortization $200,000
Deferred Charges to be Raised $100,000
Cash on Hand to Pay Notes $200,000
```
For the Sewer Utility Fund, what is the amount of statutory gross debt?
a. $300,000
b. $400,000
c. $600,000
d. $700,000
C – $500,000 (FC) + $500,000 (FCAU) - $200,000 (RA) - $200,000 (RDA) = $600,000
60
```
Fixed Capital $500,000
Fixed Capital Authorized and Uncompleted $500,000
Utility Revenue Notes $100,000
Serial Bonds Payable $100,000
Bond Anticipation Notes $200,000
Reserve for Amortization $200,000
Reserve for Deferred Amortization $200,000
Deferred Charges to be Raised $100,000
Cash on Hand to Pay Notes $200,000
```
For the Sewer Utility Capital Fund, what is the amount of bonds and notes authorized but not issued?
a. $300,000
b. $400,000
c. $600,000
d. $700,000
A – $500,000 (FC) + $500,000 (FCAU) - $200,000 (RA) - $200,000 (RDA) - $100,000 (SBP) - $200,000 (BAN) = $600,000 - $300,000 = $300,000
61
```
Fixed Capital $561,047
Fixed Capital Authorized and Uncompleted $50,000
Utility Revenue Notes $25,000
Serial Bonds Payable $261,000
Bond Anticipation Notes $10,000
Reserve for Amortization $292,573
Reserve for Deferred Amortization $8,250
Deferred Charges to be Raised by Future Revenues $224
```
For the Water and Sewer Utility Capital Fund, what is the amount of bonds and notes authorized but not issued?
a. $14,224
b. $39,448
c. $39,224
d. $14,448
C – $561,047 (FC) + $50,000 (FCAU) – $292,573 (RA) – $8,250 (DRA) – $261,000 (SBP) – $10,000 (BAN) = $39,224
62
Revenues derived from interest on utility assessments receivable become a revenue of the:
a. Current Fund
b. Utility Assessment Fund
c. Utility Operating Fund
d. Utility Capital Fund
C - Utility Operating Fund
63
The payment of bond principal on utility assessment bonds would be recorded as an:
a. Expenditure in the Utility Operating Fund
b. Expenditure in the Utility Capital Fund
c. Expenditure in the Utility Debt Service Fund
d. Expenditure in the Utility Assessment Trust Fund
D - Expenditure in the Utility Assessment Trust Fund
64
Budget appropriation for interest on Utility Assessment notes is required to be made in:
a. Assessment Trust Fund
b. General Capital Fund
c. Current Fund
d. Utility Operating Fund
e. Utility Assessment Trust Fund
D - Utility Operating Fund
65
Proceeds from the sale of Utility Assessment Bonds $500,000
Premium on Utility Assessment Bonds issued $250
Accrued interest on Utility Assessment Bonds issued $3,145
Collection of Utility Assessment Liens $1,800
Utility Assessment Overpayments $1,000
What amount of these cash receipts should be accounted for in Beach’s Utility Assessment Trust Fund?
a. $502,800
b. $2,800
c. $506,195
d. $503,050
B – $1,800 (Collection of Utility Assessment Liens) + $1,000 (Utility Assessment Overpayments) = $2,800
66
A dedicated deficit in revenues in the dedicated Utility Assessment budget would be raised by the:
a. Utility Assessment Trust Fund
b. Utility Operating Fund
c. Current Operating Fund
d. Utility Debt Service Fund
e. Collection of Assessments Levied
B Utility Operating Fund
67
In accordance with the "Requirements of Audit" promulgated by the State of New Jersey, Department of Community Affairs, Division of Local Government Services, financial statements of a local unit are presented using the:
a. Cash basis of accounting
b. Modified accrual basis of accounting with minor exceptions
c. Full accrual basis of accounting
Flow of net financial resources measurement focus
A Cash basis of accounting
68
The governing body may make temporary appropriations at any time during the first 30 days of the fiscal year. Which temporary appropriation has no limitations as to amount?
a. Employee health insurance
b. Municipal library contributions
c. Contributions for State of New Jersey pension costs
d. Capital Improvement Fund
D – N.J.S.A. 40A:2-19
69
In accordance with the local budget law, a municipality is required to adopt an annual budget of the:
a. Trust Assessment Fund
b. Current Fund
c. Utility Funds
d. All of the above
e. None of the above
D - N.J.S.A. 40A:4-21
70
Appropriation for the prior years' bills may be made in a municipalities 2009 annual budget provided that the bills were incurred during:
a. 2007
b. 2008
c. 2009
d. None – prior years’ bills are raised as over-expenditures
A – 2008’s budget is still open. This line item is for “closed” years
71
Appropriation made for specific capital purposes in the annual budget are:
a. Required to have a period of usefulness of at least 5 years
b. Not subject to the 4% tax levy CAP
c. Required to be appropriated inside the CAP under Unclassified
d. Subject to the annual spending limitation of the Cost of Living Adjustment percentage
A - Required to have a period of usefulness of at least 5 years
72
Which of the following municipal budget appropriation is limited by state budget statutes?
a. Judgments
b. Debt Service
c. Contingent Expenses
d. Reserve of Uncollected Taxes
C - Contingent Expenses
73
Expenditures that may reasonably be charged to an appropriation for contingent expenses are:
a. Overexpenditures of departmental appropriations
b. Purposes for which no budget appropriations are made
c. Deferred charges
d. Refunds of tax overpayments
b. Purposes for which no budget appropriations are made
74
Which of the following type of expenditure would be recorded and recognized as a deferred charge to future periods?
a. Prepaid school taxes
b. Overexpenditures of legally adopted budget appropriations
c. Cost of inventory supplies
d. Interfunds payable
b. Overexpenditures of legally adopted budget appropriations
75
The Director of the Division of Local Government Services shall examine the annual budgets of state fiscal year municipalities at least once every:
a. Second year
b. Third year
c. Fifth year
d. None of the above
B – Third year
N.J.S.A. 40A:4-78
76
A municipality will not be eligible for local budget examination when which of the following condition(s) exist?
a. Have outstanding fiscal year adjustment bonds
b. Received Discretionary Aid in the prior year
c. Had a tax levy sale
d. All of the above
e. None of the above
d. All of the above
77
There are several conditions that may exist at year-end that would cause a municipality to be considered in an unsound financial position. Which of the following would be considered such a condition(s)?
a. Outstanding debt in excess of statutory limits
b. Collection of current year taxes that are less than 70% of the tax levy
c. Surplus that is less than 2% of the current operating budget
d. Interfunds receivable that are not supported by cash in other funds
e. All of the above
f. None of the above
B – N.J.S.A. 52:27BB-55
Collection of current year taxes that are less than 70% of the tax levy
78
What is the minimum amount of time required between the date of introduction and the date of the public hearing for a county budget?
a. 10 days
b. 18 days
c. 28 days
d. 30 days
B - 18 days
N.J.S.A. 40A:4-47
79
Which of the following budget amendments requires that public hearing be held prior to adoption of the final budget?
a. Increase in local tax for municipal purposes by more than 5%
b. Increase in an appropriation by more than 5%
c. Decrease in an appropriation by more than 5%
d. Decrease in the local tax for municipal purposes by more than 5%
e. None of the above
A - Increase in local tax for municipal purposes by more than 5%
N.J.S.A. 40A:4-9(c)1
80
Municipal budgets shall be introduced, approved, amended and adopted by a resolution passed by the governing body by not less than a:
a. 2/3 majority
b. 2/3 majority of full membership
c. Simple majority
d. Majority of full membership
D - Majority of full membership
N.J.S.A. 40A:4-4
81
Pursuant to the 1977 appropriations budget cap, municipalities shall be prohibited from increasing their final budget appropriations by more than:
a. 2.5%
b. 3%
c. 3.5%
d. 5%
D – Municipalities have the right to go to 3.5% by passing an ordinance
82
A municipality may bank the difference between its final appropriations subject to the cap and the difference between the budget cap rate provided that an ordinance is introduced:
a. Prior to the introduction of the budget
b. Prior to adoption of the budget
c. Any time after approval of the Division of Local Government Services
d. None of the above. Cap banks are automatic
A - Prior to the introduction of the budget
N.J.S.A. 40A:4-45.14(c)
83
The municipality may, by ordinance, increase the "COLA" percentage up to 3.5% or bank the difference between its final appropriation subject to the cap and 3.5%. What is the maximum number of subsequent years to which the banked amount is available?
a. One year
b. Two years
c. Three years
d. Never – bank is available in all succeeding budget years
B - Two years
N.J.S.A. 40A:4-45.15(a)
84
A budget cap appropriation exception for group health insurance is limited to the amount that is over 4% of the:
a. Previous years expenditures
b. Previous years appropriations
c. State Health Benefits Plan increase
d. None – appropriations for Group Health Insurance are all inside Cap
A - Previous years expenditures
N.J.S.A. 40A:4-45.45(b) and LFN 2009-26
85
2008 2009
Local Municipal Purposes 2.58 3.15
County 0.86 0.82
Local School District 3.41 3.02
Local School District in Municipal Budget 0.15 0.11
Total Tax Rate (per $100 of assessed valuation) 7.00 7.10
Total valuation of new construction for 2009 $4,500,000.00
Total valuation of new construction for 2008 $3,000,000.00
Which amount would be added to Silver City’s 2009 CAP base?
a. $ 77,400.99
b. $ 81,900.00
c. $116,100.00
d. $122,850.00
A - $3,000,000 ÷ $100 x $2.58 = $30,000 x $2.58 = $77,400
You wouldn’t know 2009’s added and omitted assessments (certified in October) or the 2009 rates (certified in June) when preparing the 2009 budget
86
A municipality would be exempt from the Property Tax Levy Cap Law if their municipal purposes tax rate was:
a. $0.10 or less for 2007
b. Flat for 2007
c. Not in excess of 4% of the previous year’s tax rate
d. Less than the rate of the previous year
e. None of the above – There are no exceptions to the Tax Levy Cap
A - $0.10 or less for 2007
N.J.S.A. 40A:4-45.44
87
Which of the following appropriations is considered an exemption to the Spending Cap Limitation under the local government budget law:
a. Public Defender
b. Municipal Prosecutor
c. Municipal Services Act
d. First Aid Squad Contributions
e. All of the above
f. None of the above
A -Public Defender
N.J.S.A. 40A:4-45.3(cc) Courts are ordered to provide a public defender so there is an exemption for public defender fees since it’s a State mandated expense
88
Under the Local Government CAP Law, which of the following appropriations is NOT considered as an exception to the Spending Cap Limitation:
a. Capital purposes
b. Shared services with other political entities
c. Assuming a function of a local public utility
d. Increase in fees imposed by State law
C - Assuming a function of a local public utility
N.J.S.A. 40A:4-45.3
89
One of the exclusions in calculating the 2% Municipal Tax Levy Cap is:
a. Decrease in debt service
b. Increase in Capital Improvement Fund
c. Increase in Public Safety salaries
d. Decrease in health insurance costs
B - N.J.S.A. 40A:4-45.3(b) – Decreases have no impact on the tax levy cap
90
In 2017 your town made an emergency appropriation to protect public health for $10,000. No bonds were authorized to finance these expenditures. Also, during the year, as a result of local flooding, the town adopted an ordinance authorizing a special emergency appropriation for the preparation of drainage maps for flood control purposes in the amount of $60,000. Local flooding also resulted in the appropriation for road repair in the amount of $45,000. Neither special emergency is to be financed by borrowings. An overexpenditure of the Clerk’s – Other Expense category also incurred in 2017 in the amount of $10,000. What is the minimum amount to be raised in the 2018 budget?
a. $41,000
b. $45,000
c. $47,000
d. $49,000
C
Emergency → $10,000 x 100% = $10,000
Flooding (Sp) → $60,000 x 20% = $12,000
Road Repair (Sp) → $45,000 x 33% = $15,000
Overepxenditure → $10,000 x 100% = $10,000
$47,000
91
An emergency appropriation may be made at any time after the adoption of the budget to provide for any emergency subject to the following limitations:
a. Emergency appropriations should not exceed 3% of the prior year budget
b. Emergency appropriations are not subject to budget transfers
c. Emergency appropriations must be approved by the Division of Local Government Services prior to the expenditure of funds
d. Emergency appropriations must be financed by the issuance of emergency notes
e. All of the above
B
| [A – Must go to DCA for approval]
92
Emergency appropriations not requiring prior written approval of the Dirtector of the Division of Local Government Services are limited to:
a. 3% of total budget appropriations
b. 3% of total budget appropriations less the reserve for uncollected taxes
c. 3% of total current and utility operating appropriations made in the budget adopted for that year
d. 3% of total current and utility operating appropriations made in the budget adopted for the previous year
C - 3% of total current and utility operating appropriations made in the budget adopted for that year
N.J.S.A. 40A:4-48
93
The minimum required vote for the adoption of a special emergency appropriation that provides funds to pay for damages to roads or bridges caused by flood or hurricane is:
a. Majority of full membership
b. 2/3 majority of full membership
c. Majority
d. 2/3 majority
B - 2/3 majority of full membership
94
A change of title or text of appropriation is permitted for which of the following circumstances:
a. Establishment of a new appropriation line
b. To satisfy a deficiency in an appropriation
c. A change in administrative code
d. Transfers during the last 2 months of the fiscal year
A - Establishment of a new appropriation line
N.J.S.A. 40A:4-85
95
Unless specifically authorized by resolution of the governing body, the contracting agent of a municipality shall be the:
a. Purchasing Agent
b. Qualified Purchasing Agent
c. Governing Body
d. Municipal Manager
C - Governing Body
N.J.S.A. 40A:11-2.3
96
The present bid threshold for contracting units subject to the New Jersey Local Public Contracts Law without a qualified purchasing agent is:
a. $17,500
b. $21,000
c. $26,000
d. $36,000
e. $40,000
f. $44,000
A – LFN 2020-14
This has now
97
What is the quotation threshold for those municipalities that have a qualified purchasing agent:
a. $3,150
b. $3,900
c. $6,000
d. $5,400
e. $6,600
e. $6,600 LFN 2020-14
98
In general, all contracts for the purchase of goods shall be made for a period not to exceed
a. 12 consecutive months
b. 18 consecutive months
c. 24 consecutive months
d. 36 consecutive months
C - 24 consecutive months
N.J.S.A. 40A:11-2.3
99
Contracts for professional services cannot be awarded for terms in excess of:
a. One year
b. Two years
c. Three years
d. Five years
A – One Year
LFN 2015-20
100
A contract awarded to a Registered Municipal Accountant for audit services must be published in the official newspaper when the contract is:
a. Over the bid threshold
b. Over $17,500 but less than the bid threshold
c. Less than $17,500
d. All of the above
e. None of the above
D -All of the above
N.J.S.A. 40A:11-5
101
The chief financial officer of a local unit shall be responsible for determining the availability of sufficient funds for:
a. All contracts and purchases
b. Only contracts in excess of the bid threshold
c. Contracts that only require formal action of the governing body
d. Only multi-year contract not coinciding with the fiscal year
A – All contracts and purchases
N.J.A.C. 5-30:5.3(a)
102
Business Registration Certificates must be obtained by a municipality from all vendors when estimated contracts are in excess of:
a. 5% of the quote threshold
b. 15% of the bid threshold
c. The quote threshold
d. The bid threshold
e. All of the above
B or C – LFN 2005-12
103
N.J.A.C. 5:30-8 “Finance Administration” establishes minimum surety bond coverage requirements for municipal officers EXCEPT for:
a. Chief Financial Officer
b. Tax Collector
c. Municipal Court Judge
d. Collector of Sewer Use Charges
D Collector of Sewer Use Charges
104
Which of the following is not an agreed upon procedure to be performed by the RMA with respect to the preparation of the annual financial statements:
a. Examine the municipal minutes
b. Obtain post-closing trial balances
c. Cash counts of municipal court and all departments
d. Obtain or establish the status of all deferral charges
e. None of the above
C Cash counts of municipal court and all departments
105
When an RMA assists in the preparation of the annual financial statement pursuant to N.J.S.A. 40A:5-12, which of the following procedures is required by the Division of Local Government Services:
a. Count of cash at the close of business
b. Reading the minutes
c. Confirmation of all bank accounts
d. Sending delinquent tax notices
e. Obtaining a management representation letter
B Reading the minutes
106
The annual municipal budget is required to be signed by certain officers prior to being filed with the Division of Local Government Services. Which of the following signatures are required:
a. Mayor, Clerk, CFO
b. Registered Municipal Accountant, Clerk, Mayor
c. Clerk, CFO, Registered Municipal Accountant
d. CFO, Mayor, Registered Municipal Accountant
c. Clerk, CFO, Registered Municipal Accountant
107
When a Registered Municipal Accountant signs the annual municipal budget, the RMA certifies which of the following?
a. That the tax levy and the tax rate have been properly calculated
b. That the reserve for uncollected taxes has been properly calculated
c. That the surplus anticipated is within statutory limits
d. That the budget adds
e. All of the above
D That the budget adds
108
Pursuant to the Local Budget Examination Requirements, the Registered Municipal Accountant shall certify the budget for:
a. The public hearing on the budget shall be held within 28 days
b. That the reserve for uncollected taxes has been properly calculated
c. The tax levy does not exceed 4% of the prior year levy
d. Budget transfers of the prior year are statutorily correct
e. All of the above
f. None of the above
F – Only thing an RMA certifies is that it foots
109
A municipality is required to have an annual audit of its books, accounts and financial transactions. This annual audit can be made by:
a. Certified Public Accountant
b. Licensed Public Accountant
c. Qualified Employees of the Division of Local Government Services
d. Licensed Public School Accountant
e. None of the above
f. All of the above
C – N.J.S.A. 40A:5-4
110
Evidence of evidential matter required to be documented in a Registered Municipal Accountant’s audit workpapers in accordance with the Division of Local Government Services “Requirements of Audit” include:
a. Cash counts
b. Compliance with internal and external quality control standards
c. Procedures that assess discovery of illegal acts
d. Evidence of compliance with peer review
A Cash counts
111
Which of the following component units would be presented in the financial statements of a municipality in accordance with practices established by the “Requirements of Audit” as promulgated by the State of New Jersey, Department of Community Affairs, Division of Local Government Services?
a. Municipal Housing Authority
b. Municipal Utilities Authority
c. Municipal Water Utility
d. Local Municipal Fire District
e. All of the above
c. Municipal Water Utility
112
The summary or synopsis of audit is required to be published by N.J.S.A. 40A:5-7 after receipt of the audit. What is the number of days required for publishing the synopsis?
a. 25 days
b. 30 days
c. 45 days
d. 60 days
b. 30 days
113
A corrective action plan addressing the “Recommendations of Audit” is required to be prepared by the appropriate responsible officials, approved by the local governing body and subsequently submitted to the Division of Local Government Services. How many days from the receipt of an audit does a municipality have to comply with this requirement?
a. 30 days
b. 45 days
c. 60 days after receipt of the audit
d. 90 days
c. 60 days after receipt of the audit
114
A municipality is required to have a federal single audit in accordance with federal Uniform Guidance when federal financial assistance is equal to or exceeds:
a. $300,000 of receipts of federal financial assistance
b. $300,000 of expenditures of federal financial assistance
c. $750,000 of expenditures of federal financial assistance
d. $750,000 of receipts of federal financial assistance
c. $750,000 of expenditures of federal financial assistance
115
Which of the following audits is permitted by the New Jersey Office of Management and Budget’s Circular 15-08 for municipalities expending less than $750,000 but more than $100,000 in State assistance within their fiscal year?
a. Single audit in accordance with Uniform Guidance
b. Single audit in accordance with NJ OMB Circular 15-08
c. Financial statement audit in accordance with Government Auditing Standards
d. Single audit in accordance with the Yellow Book
c. Financial statement audit in accordance with Government Auditing Standards
116
A municipality expending $100,000 or less in federal financial assistance in a fiscal year is subject to:
a. A statutory audit only
b. Both a statutory audit and an audit in accordance with generally accepted Government Auditing Standards
c. Statutory, Yellow Book and single audits
d. Statutory audit and a program-specific audit of the federal program
b. Both a statutory audit and an audit in accordance with generally accepted Government Auditing Standards
Requirements of Audit 3.1
