CMFO EXAM - CURRENT FUND QUESTIONS AND CORRECT ANSWERS

CMFO EXAM - CURRENT FUND
QUESTIONS AND CORRECT
ANSWERS
NameA2theA2twoA2typesA2ofA2localA2unitsA2ofA2governmentA2inA2NJA2-A2Ans--
1.A2Municipalities
2.A2Counties

AA2municipalityA2&A2countyA2areA2essentially:A2-A2Ans---
A2corporationsA2createdA2byA2theA2State'sA2ConstitutionA2andA2statutes


AA2municipalA2corporationA2isA2designedA2to:A2-A2Ans---
A2aidA2theA2municipalityA2inA2carryingA2outA2specificA2activities


AA2municipalA2corporationA2hasA2theA2followingA2powers:A2(5)A2-A2Ans--
1.A2toA2sueA2&A2beA2sued,A2toA2defendA2&A2beA2defendedA2inA2allA2courtsA2ofA2law
2.A2toA2adoptA2aA2commonA2seal
3.A2toA2acquireA2property
4.A2toA2acquire,A2lease,A2andA2operateA2publicA2utilities
5.A2toA2exerciseA2anyA2powerA2&A2renderA2anyA2serviceA2whichA2contributesA2toA2theA2gen
eralA2welfare

WhatA2isA2anA2Authority?A2-A2Ans---A2anA2authorityA2isA2aA2"quasi-
municipal"A2corporationA2establishedA2forA2theA2purposeA2ofA2achievingA2certainA2objectiv
esA2orA2providingA2specifiedA2services
-A2establishedA2WITHOUTA2theA2consentA2ofA2theA2residents
-A2onlyA2hasA2powersA2specificallyA2grantedA2byA2law

ExamplesA2ofA2anA2AuthorityA2-A2Ans--1.A2waterA2treatment
2.A2sewageA2&A2wasteA2disposal
3.A2parking

WhatA2isA2anA2ordinance?A2-A2Ans---
A2anA2ordinanceA2isA2aA2municipality'sA2basicA2lawA2toA2regulateA2itsA2localA2affairs
-A2passedA2byA2theA2municipality'sA2legislativeA2body
-A2containedA2inA2aA2municipality'sA2charter
-A2MUSTA2NOTA2conflictA2withA2theA2municipality'sA2charter
-A2municipalA2lawsA2areA2subordinateA2toA2theA2state

WhatA2isA2aA2municipalA2charter?A2-A2Ans---
A2aA2municipalA2charterA2isA2toA2theA2municipality,A2whatA2theA2constitutionA2isA2toA2theA2st
ate

,WhatA2areA2theA2characteristicsA2ofA2aA2governmentalA2unitA2asA2aA2corporation?A2-
A2Ans--1.A2PermanencyA2ofA2governmentA2entity
2.A2PurposeA2ofA2establishment
3.A2AbilityA2toA2levyA2taxesA2(mainA2sourceA2ofA2revenue)A2
4.A2GreaterA2borrowingA2power
5.A2FundA2accounting
6.A2GreaterA2legalA2restrictions
7.A2FiduciaryA2responsibilityA2toA2customers
8.A2LackA2ofA2profitA2motive

CommonA2characteristicsA2sharedA2byA2aA2municipalityA2&A2privateA2business:A2-A2Ans--
1.A2doubleA2entryA2accounting
2.A2maintenanceA2ofA2aA2generalA2ledgerA2&A2subsidiaryA2ledgers
3.A2requiredA2financialA2reporting
4.A2requiredA2systemA2ofA2internalA2controls

WhatA2isA2aA2fund?A2-A2Ans---
A2aA2fundA2isA2aA2sumA2ofA2moneyA2orA2otherA2resourcesA2segregatedA2forA2theA2purposeA2
ofA2carryingA2onA2aA2specificA2activity
-A2containsA2self-balancingA2setA2ofA2accounts

RequiredA2setA2ofA2funds:A2-A2Ans--1.A2CurrentA2
2.A2Trust
3.A2Capital
4.A2UtilityA2operating
5.A2UtilityA2capital

WhatA2isA2theA2CurrentA2Fund?A2-A2Ans---
A2theA2currentA2fundA2isA2theA2fundA2whereA2allA2currentA2operationsA2ofA2theA2municipality
A2areA2accountedA2for.
-A2transactionsA2representA2theA2everydayA2operationsA2ofA2theA2localA2unit

WhatA2isA2theA2accountingA2equationA2-A2Ans--AssetsA2=A2LiabilitiesA2+A2FundA2Balance
-A2MUSTA2alwaysA2balance

WhatA2areA2theA2permanentA2(BalanceA2Sheet)A2accounts?A2-A2Ans--1.A2Assets
2.A2Liabilities
3.A2FundA2Balance

-A2AllA2threeA2majorA2accountA2groupsA2compileA2theA2balanceA2sheet
-A2theyA2areA2PERPETUALA2-A2meaningA2thatA2theyA2areA2notA2closedA2outA2annually

WhatA2areA2theA2temporaryA2(IncomeA2Statement)A2accounts?A2-A2Ans--1.A2Revenues
2.A2Appropriations

-A2theseA2accountsA2startA2eachA2accountingA2periodA2withA2NOA2balance

, ExplainA2theA2balancesA2forA2permanentA2accounts:A2-A2Ans---
A2theA2ENDINGA2balanceA2forA2eachA2balanceA2sheetA2accountA2atA2theA2endA2ofA2anA2acc
ountingA2periodA2(monthlyA2orA2annually)A2becomesA2theA2OPENINGA2balanceA2ofA2thatA2
accountA2forA2theA2nextA2accountingA2period.

ExplainA2theA2balancesA2forA2temporaryA2accounts:A2-A2Ans---
A2startA2eachA2accountingA2periodA2withA2NOA2balance
-A2theA2budgetA2isA2thenA2recordedA2toA2eachA2account
-A2currentA2periodA2transactionsA2areA2thenA2recordedA2toA2eachA2account
-
A2accountsA2areA2closedA2toA2aA2ZEROA2balanceA2throughA2journalA2entriesA2beforeA2theA2
endA2ofA2theA2accountingA2periodA2(monthlyA2orA2annually)

WhatA2isA2theA2normalA2balanceA2forA2anA2Asset?A2-A2Ans---
A2assetsA2haveA2aA2normalA2DEBITA2(DR)A2balance
-A2aA2debitA2entryA2increasesA2theA2balance
-A2aA2creditA2entryA2decreasesA2theA2balance

TypesA2ofA2assetsA2accounts:A2-A2Ans--1.A2Cash
2.A2BankA2accounts
3.A2InvestmentA2accounts
4.A2Receivables
5.A2DeferredA2charges

WhatA2isA2theA2normalA2balanceA2forA2aA2liability?A2-A2Ans---
A2LiabilitiesA2haveA2aA2normalA2CREDITA2(CR)A2balance
-A2aA2creditA2entryA2increasesA2theA2balance
-A2aA2debitA2entryA2decreasesA2theA2balance

TypesA2ofA2LiabilityA2accounts:A2-A2Ans--1.A2TaxA2overpayments
2.A2PrepaidA2taxes
3.A2AppropriationA2reserves
4.A2Payables
5.A2Reserves

WhatA2isA2aA2ReserveA2account?A2-A2Ans---
A2reserveA2accountsA2areA2generallyA2usedA2toA2accountA2forA2theA2offsetA2ofA2receivables


WhatA2isA2theA2normalA2balanceA2forA2aA2reserve?A2-A2Ans---
A2reservesA2haveA2aA2normalA2CREDITA2(CR)A2balance
-A2aA2creditA2entryA2increasesA2theA2balance
-A2aA2debitA2entryA2decreasesA2theA2balance

WhatA2isA2FundA2Balance?A2-A2Ans---
A2FundA2BalanceA2representsA2theA2EXCESSA2ofA2totalA2assetsA2lessA2totalA2liabilities