Question 1

A requirement that the Governor's operating budget be balanced usually means that:&#10;A) All expenditure proposed in that document must be covered either by revenue raised currently, available from prior year surpluses, or by borrowing on the promise to repay from future revenues.&#10;B) All expenditure proposed in that document must be covered either by revenue raised currently or available from prior year surpluses.&#10;C) The state can have no debt.&#10;D) State expenditure cannot exceed state revenue for the year.

Accepted Answer

A balanced budget requirement means that the state cannot spend more money than it takes in through revenue, and must either use existing surplus funds or generate additional revenue through taxes or other means to pay for all proposed expenditures. This does not necessarily preclude the state from having debt, as long as that debt is managed responsibly and does not exceed the state's ability to repay it.

Question 2

An allotment schedule is&#10;A) A mechanism to keep agency spending in line with the approved budget.&#10;B) A mechanism to reduce agency spending below its budget request.&#10;C) A timeline for the budget process.&#10;D) A division of fiscal duties between the House and the Senate.

Accepted Answer

An allotment schedule is a mechanism to keep agency spending in line with the approved budget. It is a method of managing the disbursement of funds to ensure that an agency does not overspend or spend in ways that are not consistent with the budgetary priorities set by Congress. The allotment schedule outlines the specific amounts of money that an agency is authorized to spend during each quarter or other defined period of time. This helps to ensure that the agency stays within its budgetary constraints by regulating the flow of funds and preventing overspending.

Question 3

The audit process which occurs after the end of the budget year is designed to accomplish all of the following EXCEPT:&#10;A) Implement controls to correct variances.&#10;B) Prevent fraud and waste.&#10;C) Ensure the accuracy of operation.&#10;D) Ensure compliance with policies and applicable laws.

Accepted Answer

The audit process after the end of the budget year is not designed to implement controls to correct variances. Rather, it is designed to ensure the accuracy of operations, ensure compliance with policies and applicable laws, and prevent fraud and waste. Correcting variances is a separate process that occurs during the budget year.

Question 4

Which of the following is not a &#34;rule of thumb&#34; used by budget analysts in review of agency budgets?&#10;A) Cut departments with &#34;bad&#34; reputations.&#10;B) Compare proposed budget with prior year and current year budget and actual expenditures to identify areas which may be reduced without great trouble.&#10;C) Recommend repair and renovation rather than replacement of facilities.&#10;D) None of the above; all are &#34;rules of thumB)&#34;

Accepted Answer

The answer of Which of the following is not a...

Question 5

Internal control standards do not include which of the following?&#10;A) Separation between operational transactions and accounting record keeping&#10;B) Maintain qualified personnel and rotate duties&#10;C) Use sequentially numbered receipt forms to acknowledge collections&#10;D) Require regular external audit

Accepted Answer

Internal control standards provide best practices and guidelines for organizations to follow in order to safeguard their assets and ensure accurate financial reporting. However, requiring a regular external audit is not an internal control standard, as external audit is typically conducted by an independent third party rather than an organization's internal control system.

Question 6

Break-even analysis attempts to determine:&#10;A) levels of transfer payments.&#10;B) levels of grant payments.&#10;C) the point at which total costs equal total revenues.&#10;D) the point at which variable costs equal variable revenues.&#10;Chapter Six

Accepted Answer

Break-even analysis is a financial tool that helps determine the point where total revenue is equal to total cost, which means there is no profit or loss. Therefore, the correct answer is C. The other options, such as levels of transfer payments or grant payments, are not related to break-even analysis. Also, the point where variable costs equal variable revenue is not enough for the break-even analysis because it doesn't account for fixed costs.

Question 7

Various strategies exist to reduce the budget deficits without actually changing spending intentions. The strategy of accelerating revenues and deferring spending is called:&#10;A) rosy scenarios.&#10;B) one shots.&#10;C) bubbles and timing.&#10;D) magic asterisk.

Accepted Answer

The strategy of accelerating revenues and deferring spending is commonly known as bubbles and timing. This strategy involves increasing tax revenues by accelerating economic growth, and deferring government expenditures by postponing infrastructure projects or delaying the implementation of social programs. This strategy is often criticized for being too reliant on economic predictions and for failing to address the long-term structural issues that contribute to budget deficits.

Question 8

Which of the following can contribute toward a phantom balance in an operating
budget?

A) Transfer operating expenses to the capital budget.
B) Accelerate payment of income tax refunds.
C) Issue payroll checks on June 15 rather than June 20 July 1 fiscal year start).
D) Change the estimate of the property tax delinquency rate from 5 percent to 10 percent, to better reflect actual collection patterns.

Accepted Answer

Transferring operating expenses to the capital budget can contribute to a phantom balance in the operating budget because it artificially reduces operating expenses and creates the appearance of a surplus. However, this practice can lead to long-term financial problems for the organization. The other options do not contribute towards a phantom balance in the operating budget. Accelerating payment of income tax refunds and changing the estimate of the property tax delinquency rate are legitimate budgeting practices that reflect actual revenue and expenditure patterns. Issuing payroll checks a few days earlier or later does not affect the budget balance as long as the total payroll expenses remain the same.

Question 9

The appropriation to the State Library System fiscal year starts July 1) for fiscal 2012 was $15,000,000. On December 31, 2011, its budget reports showed expenditures of $7,500,000 and encumbrances outstanding of $500,000. Quarterly allotments were as follows: Q1-$3,750,000; Q2-$4,500,000; Q3-$3,750,000; and Q4-$3,000,000. What was the status of system operations at that point?

A) Operation consistent with plan; half the year elapsed and half the money spent.
B) Over plan by $250,000.
C) Under plan by $250,000.
D) Under plan by $750,000.

Accepted Answer

The answer of The appropriation to the State Library System...

Question 10

When justifying a budget request in narrative form), which of the following is NOT recommended to be discussed:&#10;A) What you want to do&#10;B) Why you want to do it&#10;C) What resources will be necessary&#10;D) Technical calculations supporting the request

Accepted Answer

Technical calculations supporting the request are important to include in a budget request, as they can help demonstrate the feasibility and accuracy of the budget being proposed. Therefore, it is recommended to discuss what you want to do, why you want to do it, and what resources will be necessary in the budget request.

Deck 5: State and Local Governments