CFO FINAL EXAM 2025/2026
COMPLETE QUESTIONS WITH
CORRECT DETAILED ANSWERS ||
ALREADY GRADED A+
<LATEST VERSION>
1. GAAP - ANSWER ✔ Generally Accepted Accounting Principles is the
accounting method used by many local units outside of NJ
2. OCBOA - ANSWER ✔ Other Comprehensive Basis of Accounting method
is used by NJ municipalities and is a modified accrual basis
3. Modified Accrual - ANSWER ✔ hybrid of cash basis and accrual basis,
revenue is recorded when received in cash, expenditures are recorded when
committed through an encumbrance, all receivables most have an offsetting
reserve for receivables
4. Local Bond Law - ANSWER ✔ N.J.S.A. 40A:2
5. Local Budget Law - ANSWER ✔ N.J.S.A. 40A:4
6. Local Fiscal Affairs Law - ANSWER ✔ N.J.S.A. 40A:5
7. Local Public Contracts Law - ANSWER ✔ N.J.S.A. 40A:11
,8. Local Finance Board - ANSWER ✔ N.J.A.C. 5:30 empowered to study the
entire field of local government and promulgate rules for the interpretation
and administration of state laws included within the jurisdiction as well as
the method scope and procedure of audits and may conduct special inquiries
of local government affairs
9. Encumbrance System - ANSWER ✔ T.A.D. 85-1
10.Fixed Assets - ANSWER ✔ T.A.D. 85-2
11.General Ledger - ANSWER ✔ T.A.D. 85-3
12.Internal Control - ANSWER ✔ comprises the plan of the organization and
all of the coordinate methods and measures adopted within a business to
safeguard its assets check the accuracy and reliability of its accounting data
promote operational efficiency and encourage adherence to prescribed
managerial policies
13.checks and balances - ANSWER ✔ internal control is primarily
14.Examples of Internal Controls - ANSWER ✔ Record Security, Computer
System Security, Segregation of Duties, Reports, Bank Account
Reconciliation, Receipt of Funds, Cash Management Plan, Pre-numbered
documents, auditing of vouchers, levels of approval, encumbrance system,
surety and fidelity bonds, and inventory of equipment
15.surety bond - ANSWER ✔ primarily an insurance policy used to replace lost
funds to a predetermined limit, all personnel associated with the handling of
public funds should be adequately covered or insured
16.Surplus - ANSWER ✔ result from the closing of operations to the extent
that the overall revenues received were higher than anticipated and
expenditures were less than amounts appropriated, may be used in as
revenue in the budget
17.cash surplus - ANSWER ✔ results from collection of monies for which no
expenditures were necessary
,18.non-cash surplus - ANSWER ✔ results form deferred charges, cash deficits
and receivables such as due from NJ
19.Miscellaneous Revenue - ANSWER ✔ budget category includes frequently
collected revenues from licenses fees and permits fines and costs from
municipal court operations, interest and costs on taxes, parking fees, energy
receipts tax, and rental of public property
20.Receipts from Delinquent Taxes - ANSWER ✔ maximum amount that may
be anticipated in the budget is based on a calculation of the prior year's
collection percentage times the delinquent tax balance
21.Local Units - ANSWER ✔ municipalities and counties that are corporations
created by the state's constitution and statutes
22.authority - ANSWER ✔ quasi-municipal corporations established without
the consent of the residents for the purpose of achieving certain objectives or
providing specified services, such as water treatment, sewage and waste
disposal
23.municipal corporations - ANSWER ✔ have the powers to: sue and be sued,
adopt a common seal, acquire property, acquire, lease and operate public
utilities, exercise any power and render any service which contributes to the
general welfare
24.Accounting and financial practices - ANSWER ✔ -Accounting system must
show that legal provisions have been complied with.
-Accounting system must be on a double entry basis, with a general ledger
-Funds must be classified consistent with legal provisions (Defined Later)
-A complete self-balancing group of accounts must be established for each
fund.
-An annual audit of accounts is required to be conducted by a Registered
Municipal Accountant (RMA)
-Adherence to budgets is required by Statute -accounts should be centralized
under the direction of one officer
25.fund - ANSWER ✔ sum of money or other resources segregated for the
purpose of carrying on a specific activity or attaining certain objectives in
, accordance with special regulations restrictions or limitations and
constituting an independent fiscal and accounting entity with a self-
balancing set of accounts
26.Current Fund - ANSWER ✔ fund in which all current operations of the
municipality are accounted for, provides for budgetary compliance of such
operations
27.accounting equation - ANSWER ✔ assets= liabilities + fund balance
28.assets - ANSWER ✔ generally have a debit balance, a debit entry to an asset
increases the balance and a credit entry decreases the balance, include: cash,
bank accounts, investment accounts, receivables, & deferred charges
29.liabilities - ANSWER ✔ generally have a credit balance, a credit entry
increases the balance and a debit entry decreases the balance, include: tax
overpayments, prepaid taxes, appropriation reserves, and payables
30.Reserves - ANSWER ✔ have a credit balance, a credit entry to a reserve
account increases the balance, generally used to account for the offset of
receivables
31.Fund Balance - ANSWER ✔ must have a credit balance, the excess of total
assets less total liabilities, represents unused resources available for future
use
32.Revenue - ANSWER ✔ income statement account, budget is recorded as a
debit entry, when revenue is received the account is credited, at the close of
the year they are closed to operations, accounts include: taxes, grants, fees,
permits, licenses
33.Appropriations - ANSWER ✔ budget is recorded as a credit, encumbrances
are recorded as a debit, closed to appropriation reserves, accounts include:
salaries & wages, other expenses, debt service, statutory expenditures, and
the reserve for uncollected taxes
34.temporary budget - ANSWER ✔ adopted within first 30 days of the year,
can be up to 26.25% of prior years budget less public assistance capital
improvement fund and debt service
COMPLETE QUESTIONS WITH
CORRECT DETAILED ANSWERS ||
ALREADY GRADED A+
<LATEST VERSION>
1. GAAP - ANSWER ✔ Generally Accepted Accounting Principles is the
accounting method used by many local units outside of NJ
2. OCBOA - ANSWER ✔ Other Comprehensive Basis of Accounting method
is used by NJ municipalities and is a modified accrual basis
3. Modified Accrual - ANSWER ✔ hybrid of cash basis and accrual basis,
revenue is recorded when received in cash, expenditures are recorded when
committed through an encumbrance, all receivables most have an offsetting
reserve for receivables
4. Local Bond Law - ANSWER ✔ N.J.S.A. 40A:2
5. Local Budget Law - ANSWER ✔ N.J.S.A. 40A:4
6. Local Fiscal Affairs Law - ANSWER ✔ N.J.S.A. 40A:5
7. Local Public Contracts Law - ANSWER ✔ N.J.S.A. 40A:11
,8. Local Finance Board - ANSWER ✔ N.J.A.C. 5:30 empowered to study the
entire field of local government and promulgate rules for the interpretation
and administration of state laws included within the jurisdiction as well as
the method scope and procedure of audits and may conduct special inquiries
of local government affairs
9. Encumbrance System - ANSWER ✔ T.A.D. 85-1
10.Fixed Assets - ANSWER ✔ T.A.D. 85-2
11.General Ledger - ANSWER ✔ T.A.D. 85-3
12.Internal Control - ANSWER ✔ comprises the plan of the organization and
all of the coordinate methods and measures adopted within a business to
safeguard its assets check the accuracy and reliability of its accounting data
promote operational efficiency and encourage adherence to prescribed
managerial policies
13.checks and balances - ANSWER ✔ internal control is primarily
14.Examples of Internal Controls - ANSWER ✔ Record Security, Computer
System Security, Segregation of Duties, Reports, Bank Account
Reconciliation, Receipt of Funds, Cash Management Plan, Pre-numbered
documents, auditing of vouchers, levels of approval, encumbrance system,
surety and fidelity bonds, and inventory of equipment
15.surety bond - ANSWER ✔ primarily an insurance policy used to replace lost
funds to a predetermined limit, all personnel associated with the handling of
public funds should be adequately covered or insured
16.Surplus - ANSWER ✔ result from the closing of operations to the extent
that the overall revenues received were higher than anticipated and
expenditures were less than amounts appropriated, may be used in as
revenue in the budget
17.cash surplus - ANSWER ✔ results from collection of monies for which no
expenditures were necessary
,18.non-cash surplus - ANSWER ✔ results form deferred charges, cash deficits
and receivables such as due from NJ
19.Miscellaneous Revenue - ANSWER ✔ budget category includes frequently
collected revenues from licenses fees and permits fines and costs from
municipal court operations, interest and costs on taxes, parking fees, energy
receipts tax, and rental of public property
20.Receipts from Delinquent Taxes - ANSWER ✔ maximum amount that may
be anticipated in the budget is based on a calculation of the prior year's
collection percentage times the delinquent tax balance
21.Local Units - ANSWER ✔ municipalities and counties that are corporations
created by the state's constitution and statutes
22.authority - ANSWER ✔ quasi-municipal corporations established without
the consent of the residents for the purpose of achieving certain objectives or
providing specified services, such as water treatment, sewage and waste
disposal
23.municipal corporations - ANSWER ✔ have the powers to: sue and be sued,
adopt a common seal, acquire property, acquire, lease and operate public
utilities, exercise any power and render any service which contributes to the
general welfare
24.Accounting and financial practices - ANSWER ✔ -Accounting system must
show that legal provisions have been complied with.
-Accounting system must be on a double entry basis, with a general ledger
-Funds must be classified consistent with legal provisions (Defined Later)
-A complete self-balancing group of accounts must be established for each
fund.
-An annual audit of accounts is required to be conducted by a Registered
Municipal Accountant (RMA)
-Adherence to budgets is required by Statute -accounts should be centralized
under the direction of one officer
25.fund - ANSWER ✔ sum of money or other resources segregated for the
purpose of carrying on a specific activity or attaining certain objectives in
, accordance with special regulations restrictions or limitations and
constituting an independent fiscal and accounting entity with a self-
balancing set of accounts
26.Current Fund - ANSWER ✔ fund in which all current operations of the
municipality are accounted for, provides for budgetary compliance of such
operations
27.accounting equation - ANSWER ✔ assets= liabilities + fund balance
28.assets - ANSWER ✔ generally have a debit balance, a debit entry to an asset
increases the balance and a credit entry decreases the balance, include: cash,
bank accounts, investment accounts, receivables, & deferred charges
29.liabilities - ANSWER ✔ generally have a credit balance, a credit entry
increases the balance and a debit entry decreases the balance, include: tax
overpayments, prepaid taxes, appropriation reserves, and payables
30.Reserves - ANSWER ✔ have a credit balance, a credit entry to a reserve
account increases the balance, generally used to account for the offset of
receivables
31.Fund Balance - ANSWER ✔ must have a credit balance, the excess of total
assets less total liabilities, represents unused resources available for future
use
32.Revenue - ANSWER ✔ income statement account, budget is recorded as a
debit entry, when revenue is received the account is credited, at the close of
the year they are closed to operations, accounts include: taxes, grants, fees,
permits, licenses
33.Appropriations - ANSWER ✔ budget is recorded as a credit, encumbrances
are recorded as a debit, closed to appropriation reserves, accounts include:
salaries & wages, other expenses, debt service, statutory expenditures, and
the reserve for uncollected taxes
34.temporary budget - ANSWER ✔ adopted within first 30 days of the year,
can be up to 26.25% of prior years budget less public assistance capital
improvement fund and debt service
