CFO Exam Questions and Answers
100% Solved | Graded A+
Local Units - ✔✔municipalities and counties that are corporations created by
the state's constitution and statutes
authority - ✔✔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
municipal corporations - ✔✔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
accounting and financial practices - ✔✔-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)
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©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,-Adherence to budgets is required by Statute -accounts should be centralized
under the direction of one officer
fund - ✔✔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
Current Fund - ✔✔fund in which all current operations of the municipality are
accounted for, provides for budgetary compliance of such operations
accounting equation - ✔✔assets= liabilities + fund balance
assets - ✔✔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
liabilities - ✔✔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
Reserves - ✔✔have a credit balance, a credit entry to a reserve account
increases the balance, generally used to account for the offset of receivables
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©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,Fund Balance - ✔✔must have a credit balance, the excess of total assets less
total liabilities, represents unused resources available for future use
Revenue - ✔✔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
Appropriations - ✔✔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
GAAP - ✔✔Generally Accepted Accounting Principles is the accounting method
used by many local units outside of NJ
OCBOA - ✔✔Other Comprehensive Basis of Accounting method is used by NJ
municipalities and is a modified accrual basis
Modified Accrual - ✔✔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
Local Bond Law - ✔✔N.J.S.A. 40A:2
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©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
, Local Budget Law - ✔✔N.J.S.A. 40A:4
Local Fiscal Affairs Law - ✔✔N.J.S.A. 40A:5
Local Public Contracts Law - ✔✔N.J.S.A. 40A:11
Local Finance Board - ✔✔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
Encumbrance System - ✔✔T.A.D. 85-1
Fixed Assets - ✔✔T.A.D. 85-2
General Ledger - ✔✔T.A.D. 85-3
Internal Control - ✔✔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
checks and balances - ✔✔internal control is primarily
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©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
100% Solved | Graded A+
Local Units - ✔✔municipalities and counties that are corporations created by
the state's constitution and statutes
authority - ✔✔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
municipal corporations - ✔✔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
accounting and financial practices - ✔✔-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)
1|Page
©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,-Adherence to budgets is required by Statute -accounts should be centralized
under the direction of one officer
fund - ✔✔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
Current Fund - ✔✔fund in which all current operations of the municipality are
accounted for, provides for budgetary compliance of such operations
accounting equation - ✔✔assets= liabilities + fund balance
assets - ✔✔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
liabilities - ✔✔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
Reserves - ✔✔have a credit balance, a credit entry to a reserve account
increases the balance, generally used to account for the offset of receivables
2|Page
©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,Fund Balance - ✔✔must have a credit balance, the excess of total assets less
total liabilities, represents unused resources available for future use
Revenue - ✔✔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
Appropriations - ✔✔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
GAAP - ✔✔Generally Accepted Accounting Principles is the accounting method
used by many local units outside of NJ
OCBOA - ✔✔Other Comprehensive Basis of Accounting method is used by NJ
municipalities and is a modified accrual basis
Modified Accrual - ✔✔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
Local Bond Law - ✔✔N.J.S.A. 40A:2
3|Page
©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
, Local Budget Law - ✔✔N.J.S.A. 40A:4
Local Fiscal Affairs Law - ✔✔N.J.S.A. 40A:5
Local Public Contracts Law - ✔✔N.J.S.A. 40A:11
Local Finance Board - ✔✔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
Encumbrance System - ✔✔T.A.D. 85-1
Fixed Assets - ✔✔T.A.D. 85-2
General Ledger - ✔✔T.A.D. 85-3
Internal Control - ✔✔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
checks and balances - ✔✔internal control is primarily
4|Page
©KERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
