PADM 5400 Midterm Exam Study
Guide A+ Graded
Public goods - ANSWER Goods and services provided by local government that cannot
be sold in units and whose benefits accrue to all citizens
These goods and services are generally accounted for in governmental types of funds
and are financed from general taxes
Non-rivalrous and non-excludable.
Example: public safety. All members of the public have a right to safety, not just the ones
who can afford it.
Private goods - ANSWER Consumer goods and services that are sold in discrete units
for a price and whose benefits nonbuyers are effectively excluded from enjoying
Typically produced by the private market, but local governments assume responsibility
for their production if there is no profit incentive for private investors
Government can finance private goods and services through charges to users or
through general revenues
Rivalrous and excludable. Consumptions by one person preclude others from
consuming them and their benefits are limited to those willing to pay for it. Can be
divided.
Merit goods - ANSWER Services or goods that provide such a benefit to the entire
community that the government steps in and provides it for free. These are goods and
services endowed with a public purpose but providing individual benefits that can be
denied to those unwilling to pay for them
Some of the benefits from these goods and services accrue to the whole community,
such as the improvement of business opportunities or the creation of jobs
The remaining private benefits should be financed by service charge to users
Example: Highways, water, or education
Operating budget - ANSWER The portion of the budget that deals with recurring
expenditures
Reports the spending plan for a government's ongoing services, such as police and fire
protection, parks and recreation, water, and sewer service.
,Typically organizes information by departments and provides details on such line items
as personnel, supplies, contract services, travel, utilities, and smaller capital items
(e.g., office equipment)
Receives money from current revenues, such as property, sales, and income taxes;
service charges; fees and fines; and grants.
Capital budget - ANSWER A spending plan for improvements to or acquisition of land,
facilities, equipment, and infrastructure
Balances revenues and expenditures, specifies the sources of revenues, lists each
project or acquisition, and must ordinarily be approved through adoption of an
appropriation by the legislative body
One-time non recurring
Example: highway and building construction (typically a part of the Capital Improvement
plan CIP)
Comprehensive budget - ANSWER Consists a projection of all the recurring income and
expenditure and non-recurring expenditure
Includes all fund types in the annual budget process
Annual financial report - ANSWER Compares the appropriation for each department, as
amended with the actual amount of expenditures
Fiscal year - ANSWER The start of a budgeting cycle (typically starts Oct 1 - Sept 31)
Current year - ANSWER Current fiscal year in which a budget is prepared and adopted
Budget year - ANSWER The financial year of the municipality for which an annual budget
is to be approved
Actual budget - ANSWER The process of comparing your organization's predicted
budget to the amount you actually have, in order to find the difference
Estimated budget - ANSWER A preliminary assessment either of funds project to be
available
Approved budget - ANSWER Instructs the accounting system on how much to set aside
in the fund balance for reserves and what interfund transfers to make, and it provides
the accounting system with information on the amount and type of revenues to accrue
Final budget - ANSWER The adopted budget adjusted by all revisions through the fiscal
year
Current expenditures - ANSWER Expenditures on goods and service consumed within
the current year
, Current revenues - ANSWER Revenues gained from goods and services within the
current year
Long-term revenues - ANSWER Advances received from customers for goods or
services expected to be delivered in greater than one year. Since this revenue is
considered 'unearned', a liability for this prepayment is recorded on the balance sheet
until delivery of goods or completion of services
AKA "deferred revenue"
Long-term expenditures - ANSWER Long-term investments, meaning the assets
purchased have a useful life of one year or more. Types of capital expenditures can
include purchases of property, equipment, land, computers, furniture, and software.
Balanced budget - ANSWER When current revenues = current expenditures
Deficit budget - ANSWER When current expenditures > current revenues
Surplus budget - ANSWER When current revenues > current expenditures
Structural deficit - ANSWER When a budget deficit persists for some time
Line-item budget - ANSWER Shifted power away from political bosses to legislative
bodies
Collects and reports information on inputs (resources) used in the productions of
government goods and services
Zero-Base Budget (ZBB) - ANSWER In response to pressure to limit government
spending, this budget relies on existing accounting information and focuses on budget
inputs (the resources used by local governments to produce goods and services),
organizing them into decision packages that reflect various levels of effort and costs
Target-base budget - ANSWER The budget office gives each department a maximum
dollar figure for its budget request, basing its targets for each department on revenue
estimates for the forthcoming fiscal year and on any changes in policy markers'
priorities
Intended to simplify budget preparation, mitigate interdepartmental conflict, and
gamesmanship
Guide A+ Graded
Public goods - ANSWER Goods and services provided by local government that cannot
be sold in units and whose benefits accrue to all citizens
These goods and services are generally accounted for in governmental types of funds
and are financed from general taxes
Non-rivalrous and non-excludable.
Example: public safety. All members of the public have a right to safety, not just the ones
who can afford it.
Private goods - ANSWER Consumer goods and services that are sold in discrete units
for a price and whose benefits nonbuyers are effectively excluded from enjoying
Typically produced by the private market, but local governments assume responsibility
for their production if there is no profit incentive for private investors
Government can finance private goods and services through charges to users or
through general revenues
Rivalrous and excludable. Consumptions by one person preclude others from
consuming them and their benefits are limited to those willing to pay for it. Can be
divided.
Merit goods - ANSWER Services or goods that provide such a benefit to the entire
community that the government steps in and provides it for free. These are goods and
services endowed with a public purpose but providing individual benefits that can be
denied to those unwilling to pay for them
Some of the benefits from these goods and services accrue to the whole community,
such as the improvement of business opportunities or the creation of jobs
The remaining private benefits should be financed by service charge to users
Example: Highways, water, or education
Operating budget - ANSWER The portion of the budget that deals with recurring
expenditures
Reports the spending plan for a government's ongoing services, such as police and fire
protection, parks and recreation, water, and sewer service.
,Typically organizes information by departments and provides details on such line items
as personnel, supplies, contract services, travel, utilities, and smaller capital items
(e.g., office equipment)
Receives money from current revenues, such as property, sales, and income taxes;
service charges; fees and fines; and grants.
Capital budget - ANSWER A spending plan for improvements to or acquisition of land,
facilities, equipment, and infrastructure
Balances revenues and expenditures, specifies the sources of revenues, lists each
project or acquisition, and must ordinarily be approved through adoption of an
appropriation by the legislative body
One-time non recurring
Example: highway and building construction (typically a part of the Capital Improvement
plan CIP)
Comprehensive budget - ANSWER Consists a projection of all the recurring income and
expenditure and non-recurring expenditure
Includes all fund types in the annual budget process
Annual financial report - ANSWER Compares the appropriation for each department, as
amended with the actual amount of expenditures
Fiscal year - ANSWER The start of a budgeting cycle (typically starts Oct 1 - Sept 31)
Current year - ANSWER Current fiscal year in which a budget is prepared and adopted
Budget year - ANSWER The financial year of the municipality for which an annual budget
is to be approved
Actual budget - ANSWER The process of comparing your organization's predicted
budget to the amount you actually have, in order to find the difference
Estimated budget - ANSWER A preliminary assessment either of funds project to be
available
Approved budget - ANSWER Instructs the accounting system on how much to set aside
in the fund balance for reserves and what interfund transfers to make, and it provides
the accounting system with information on the amount and type of revenues to accrue
Final budget - ANSWER The adopted budget adjusted by all revisions through the fiscal
year
Current expenditures - ANSWER Expenditures on goods and service consumed within
the current year
, Current revenues - ANSWER Revenues gained from goods and services within the
current year
Long-term revenues - ANSWER Advances received from customers for goods or
services expected to be delivered in greater than one year. Since this revenue is
considered 'unearned', a liability for this prepayment is recorded on the balance sheet
until delivery of goods or completion of services
AKA "deferred revenue"
Long-term expenditures - ANSWER Long-term investments, meaning the assets
purchased have a useful life of one year or more. Types of capital expenditures can
include purchases of property, equipment, land, computers, furniture, and software.
Balanced budget - ANSWER When current revenues = current expenditures
Deficit budget - ANSWER When current expenditures > current revenues
Surplus budget - ANSWER When current revenues > current expenditures
Structural deficit - ANSWER When a budget deficit persists for some time
Line-item budget - ANSWER Shifted power away from political bosses to legislative
bodies
Collects and reports information on inputs (resources) used in the productions of
government goods and services
Zero-Base Budget (ZBB) - ANSWER In response to pressure to limit government
spending, this budget relies on existing accounting information and focuses on budget
inputs (the resources used by local governments to produce goods and services),
organizing them into decision packages that reflect various levels of effort and costs
Target-base budget - ANSWER The budget office gives each department a maximum
dollar figure for its budget request, basing its targets for each department on revenue
estimates for the forthcoming fiscal year and on any changes in policy markers'
priorities
Intended to simplify budget preparation, mitigate interdepartmental conflict, and
gamesmanship
