2025 CFO TEST BANK EXAM QUESTIONS WITH ANSWERS
2025/2026 GRADED A+
contingent expenses - Budget Law allows an appropriation for these in an amount not
more than 3% of the total appropriations for operating purposes
Dedication by Rider - a request to the Director to approve in the budget dedicated
revenues anticipated to be receiving during the year, which are not subject to a
reasonably accurate estimate in advance
DLGS Components - Bureau of Financial Regulation, Bureau of Local Management
Services, Bureau of Authority Regulation, Office of Local Government Research, Local
Finance Board
February 10 - the AFS must be certified and filed by
budget must be introduced by:
Flexible Chart of Accounts - categorized budget appropriations and revenues in a
coding system
Budget amendments - budget may be amended at anytime prior to adoption without
advertisement unless add new item of appropriation in excess of 1% of total of
appropriations, inc/dec any item by more than 10%, inc the amount to be raised by
more than 5% unless for emergency, if these happen then the amendment requires a
public hearing and publication 3 days prior
5 years - minimum useful life of capital items
2010 CAP Law - (Levy CAP) imposes a 2$ cap on the increase of local government tax
levies subject to limited exceptions
NJSA 40A:4 - local budget law
NJ Law - Title: Chapter-Section. Subsection
NJSA 40:4-85 - (Change in Text and title regulation) the director may make such
correction of the title text or amount of any item of appropriation appearing in the
adopted budget only as shall be necessary to make said item of appropriation available
for the specific purpose or purposes required by the local unit
NJSA 40:4-87 - (Chapter 159 method) the director may approve the insertion of any
special item of revenue such as grant funds in the budget of any local unit when such
item shall have been made available by law and the amount thereof shall not have been
determined prior to the adoption of the budget
Office of Local Government Research - provides local government units with assistance
on information technology issues and state aid calculations
,Budget introduction - 3 copies must be filed with the Director within 3 days following the
introduction
line item budget - type of budget that must be adopted by local governments, includes
line item appropriations for each department or operation
2 times - payment of bond interest each year
1 time - payment of bond principal each year
Self Examination - budget approval by the state of NJ establishes a 3 year rotating
comprehensive review process by the Division so 2 years on self 1 year reviewed
Statutory Expenditures - include payments due to the various state pension systems,
unemployment compensation, disability insurance, FICA
Bureau of Authority Regulation - supervises local public authorities and special districts
on matters relating to budgeting accounting and financial reporting, reviews authority
contracts for privatization of services such as water supply waste treatment and
resource recovery
TAD 85-1 - Encumbrance Accounting System
TAD 85-2 - Requires a fixed assets ledger and recording system
temporary budget - 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
Transitional year budget - when municipalities switched to SFY needed to adopt this
budget to account for the expenditures from Jan 1-June 30, the towns were allowed to
issue FYABS (fiscal year adjustment bonds) to finance the 6 months
Type 1 school - school board members are appointed by the mayor and the final budget
approval is granted by a board of school estimate, debt is part of the municipal capital
fund
Board of School Estimate - comprised of the mayor two members of the governing body
and two members of the board of education
Bureau of Financial Regulation - provides fiscal oversight and essential services to
municipal and county governments
Bureau of Local Management Services - provides local governments with advisory and
technical assistance on a variety of subjects and financial aid through several state
budgeted programs
,Salaries & Wages - XX-XXX-1
Other Expenses - XX-XXX-2
accounts payable - bills your municipality owes to venders and other agencies such as
the school district shown as a liability
accounts receivable - amounts owed to you be other parties
accrual accounting - revenue is recognized when earned
adjusting entries - at the end of accounting period to account for items that don't get
recorded in our daily transactions, account for sale of fixed assets, ensure grants
receivables and reserves are in proof
annual financials - Annual Debt Statement, Supplemental Debt Statement, Annual
Financial Statement, Budget Document
Assets - liabilities + Fund Balance cash, petty cash, investments, prepaid insurance,
current & delinquent taxes, TTL taxes receivable, interfund receivable, foreclosed
property, buildings, equipment
Balance Sheet - a snapshot of the organization at a given date in time, it lists assets
liabilities and the difference between the two which is the fund balance
Bank Reconciliation - prepare monthly, verifies the amount of cash, uncovers theft and
oddities
cash accounting - revenues is recorded when cash received
Cash Disbursement Journal - orderly & systematic initial record of cash disbursed
cash flow forecasting - plans what cash will come into the organization in order to
ensure that outgoing can be managed so as to avoid them exceeding cash flow coming
in
cash receipts journal - orderly & systematic initial record of cash received, retain in date
order, supporting documentation, total columns monthly
closing entries - journal entries made at the end of an accounting period to set the
balance of temporary accounts such as revenue and expenditure to zero to begin the
next period
current fund - general fund of a municipality in which all transactions are recorded which
are encompassed in a single budget year
, depreciation - nj municipalities do not account for this except in utility and enterprise
funds
double entry accounting - every transaction has two journal entries a debit and a credit
that are equal
encumbrance accounting system - sequentially numbered purchase orders, can know
balance at any given time
encumbrances - obligations which are in the form of purchase orders contracts or salary
commitments which are chargeable to a line item appropriation or appropriation reserve
FASB - Financial Accounting Standards Board
Fund Accounting - segregation of transactions into various dedicated accounts, NJ
municipal accounting stems are divided into current capital utility trust and grant funds,
utility funds are divided into operating and capital funds
GASB - Governmental Accounting Standards Board
General Capital Fund - a fund used to account for all general capital improvements
equipment and facility acquisition or major facility improvements not attributed to the
current or utility funds. Income in this fund is derived from budgetary appropriations or
legal approved bond ordinances.
Interfund - Must be liquidated before the end of the budget year
Long Term Liabilities - Bonds, long term leases, pension obligations, deferred payments
Net Pay - Gross Pay-Deductions
TAD 85-3 - General Ledger
NJSA 40A:2 - Local Bond Law
NJSA 40A:5 - Local Fiscal Affairs Law
NJSA 40A:11 - Local Public Contracts law
Payroll Journal - orderly & systematic initial record of payroll, includes what
appropriations to be charged
Prepaid Expenses - asset of the township because the vendor or supplier owes the
organization a good or service, like annual insurance premium
2025/2026 GRADED A+
contingent expenses - Budget Law allows an appropriation for these in an amount not
more than 3% of the total appropriations for operating purposes
Dedication by Rider - a request to the Director to approve in the budget dedicated
revenues anticipated to be receiving during the year, which are not subject to a
reasonably accurate estimate in advance
DLGS Components - Bureau of Financial Regulation, Bureau of Local Management
Services, Bureau of Authority Regulation, Office of Local Government Research, Local
Finance Board
February 10 - the AFS must be certified and filed by
budget must be introduced by:
Flexible Chart of Accounts - categorized budget appropriations and revenues in a
coding system
Budget amendments - budget may be amended at anytime prior to adoption without
advertisement unless add new item of appropriation in excess of 1% of total of
appropriations, inc/dec any item by more than 10%, inc the amount to be raised by
more than 5% unless for emergency, if these happen then the amendment requires a
public hearing and publication 3 days prior
5 years - minimum useful life of capital items
2010 CAP Law - (Levy CAP) imposes a 2$ cap on the increase of local government tax
levies subject to limited exceptions
NJSA 40A:4 - local budget law
NJ Law - Title: Chapter-Section. Subsection
NJSA 40:4-85 - (Change in Text and title regulation) the director may make such
correction of the title text or amount of any item of appropriation appearing in the
adopted budget only as shall be necessary to make said item of appropriation available
for the specific purpose or purposes required by the local unit
NJSA 40:4-87 - (Chapter 159 method) the director may approve the insertion of any
special item of revenue such as grant funds in the budget of any local unit when such
item shall have been made available by law and the amount thereof shall not have been
determined prior to the adoption of the budget
Office of Local Government Research - provides local government units with assistance
on information technology issues and state aid calculations
,Budget introduction - 3 copies must be filed with the Director within 3 days following the
introduction
line item budget - type of budget that must be adopted by local governments, includes
line item appropriations for each department or operation
2 times - payment of bond interest each year
1 time - payment of bond principal each year
Self Examination - budget approval by the state of NJ establishes a 3 year rotating
comprehensive review process by the Division so 2 years on self 1 year reviewed
Statutory Expenditures - include payments due to the various state pension systems,
unemployment compensation, disability insurance, FICA
Bureau of Authority Regulation - supervises local public authorities and special districts
on matters relating to budgeting accounting and financial reporting, reviews authority
contracts for privatization of services such as water supply waste treatment and
resource recovery
TAD 85-1 - Encumbrance Accounting System
TAD 85-2 - Requires a fixed assets ledger and recording system
temporary budget - 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
Transitional year budget - when municipalities switched to SFY needed to adopt this
budget to account for the expenditures from Jan 1-June 30, the towns were allowed to
issue FYABS (fiscal year adjustment bonds) to finance the 6 months
Type 1 school - school board members are appointed by the mayor and the final budget
approval is granted by a board of school estimate, debt is part of the municipal capital
fund
Board of School Estimate - comprised of the mayor two members of the governing body
and two members of the board of education
Bureau of Financial Regulation - provides fiscal oversight and essential services to
municipal and county governments
Bureau of Local Management Services - provides local governments with advisory and
technical assistance on a variety of subjects and financial aid through several state
budgeted programs
,Salaries & Wages - XX-XXX-1
Other Expenses - XX-XXX-2
accounts payable - bills your municipality owes to venders and other agencies such as
the school district shown as a liability
accounts receivable - amounts owed to you be other parties
accrual accounting - revenue is recognized when earned
adjusting entries - at the end of accounting period to account for items that don't get
recorded in our daily transactions, account for sale of fixed assets, ensure grants
receivables and reserves are in proof
annual financials - Annual Debt Statement, Supplemental Debt Statement, Annual
Financial Statement, Budget Document
Assets - liabilities + Fund Balance cash, petty cash, investments, prepaid insurance,
current & delinquent taxes, TTL taxes receivable, interfund receivable, foreclosed
property, buildings, equipment
Balance Sheet - a snapshot of the organization at a given date in time, it lists assets
liabilities and the difference between the two which is the fund balance
Bank Reconciliation - prepare monthly, verifies the amount of cash, uncovers theft and
oddities
cash accounting - revenues is recorded when cash received
Cash Disbursement Journal - orderly & systematic initial record of cash disbursed
cash flow forecasting - plans what cash will come into the organization in order to
ensure that outgoing can be managed so as to avoid them exceeding cash flow coming
in
cash receipts journal - orderly & systematic initial record of cash received, retain in date
order, supporting documentation, total columns monthly
closing entries - journal entries made at the end of an accounting period to set the
balance of temporary accounts such as revenue and expenditure to zero to begin the
next period
current fund - general fund of a municipality in which all transactions are recorded which
are encompassed in a single budget year
, depreciation - nj municipalities do not account for this except in utility and enterprise
funds
double entry accounting - every transaction has two journal entries a debit and a credit
that are equal
encumbrance accounting system - sequentially numbered purchase orders, can know
balance at any given time
encumbrances - obligations which are in the form of purchase orders contracts or salary
commitments which are chargeable to a line item appropriation or appropriation reserve
FASB - Financial Accounting Standards Board
Fund Accounting - segregation of transactions into various dedicated accounts, NJ
municipal accounting stems are divided into current capital utility trust and grant funds,
utility funds are divided into operating and capital funds
GASB - Governmental Accounting Standards Board
General Capital Fund - a fund used to account for all general capital improvements
equipment and facility acquisition or major facility improvements not attributed to the
current or utility funds. Income in this fund is derived from budgetary appropriations or
legal approved bond ordinances.
Interfund - Must be liquidated before the end of the budget year
Long Term Liabilities - Bonds, long term leases, pension obligations, deferred payments
Net Pay - Gross Pay-Deductions
TAD 85-3 - General Ledger
NJSA 40A:2 - Local Bond Law
NJSA 40A:5 - Local Fiscal Affairs Law
NJSA 40A:11 - Local Public Contracts law
Payroll Journal - orderly & systematic initial record of payroll, includes what
appropriations to be charged
Prepaid Expenses - asset of the township because the vendor or supplier owes the
organization a good or service, like annual insurance premium
