CMFO STUDY GUIDE 2026 EXAM QUESTIONS AND
SOLUTIONS RATED A+
✔✔False - ✔✔T/F: The unexpended balance of debt service must be cancelled by
resolution.
✔✔False - ✔✔T/F: Capital Budget must be adopted by a majority of the governing body.
✔✔True - ✔✔T/F: Municipalities are permitted to negotiate with a vendor, after 2
attempts, responses to bids were too high and no bids were submitted.
✔✔True - ✔✔T/F: If Trust Assessment Fund cash is less than the required budgeted
amount to retire debt service, a required appropriation in the Current Fund budget is
necessary to cover the deficit.
✔✔performance based budgeting - ✔✔The number miles of roads in terms of
expenditures would be an example of
✔✔maturity schedule for bonds - ✔✔Which does not have to be included in the bond
ordinance?
✔✔2/3 of full membership - ✔✔Budget appropriation transfers during the last 2 months
of the calendar year requires which of the following votes?
✔✔DLGS approval of specification - ✔✔Which of the following would not be included in
specifications for banking services?
✔✔True - ✔✔T/F: Prepaid Taxes applied to Taxes Receivable does not create a
deferred charge
✔✔Items on municipal website for best practices - ✔✔3 years of adopted budgets,
proposed budget, most recent AFS
✔✔equalized valuation - ✔✔Represents the true value of all taxable property in the
municipality
✔✔derivatives - ✔✔Not a permissible investment
✔✔False - ✔✔T/F: Budget transfers may be made to: Deferred Charges, Reserve for
Uncollected Taxes, Down Payment on Improvements and Capital Improvement Fund
✔✔40 years - ✔✔Period of usefulness may not exceed
,✔✔DLGS - ✔✔____________ must approve: petty cash fund, change in title and text,
dedication by rider, and emergency appropriations in excess of 3% of operating
appropriations
✔✔Net debt - ✔✔Borrowing capacity is based on
✔✔Patrol cars - ✔✔Not bondable assets
✔✔$1000000 - ✔✔Local government bonds may be sold privately except when the total
of bonds is more than
✔✔eligible shared services - ✔✔Joint collection of taxes, joint municipal court, joint solid
waste collection/disposal
✔✔False - ✔✔T/F: Dedication by Rider must be accounted for in the current fund
✔✔governing body - ✔✔Special Improvement District budgets must be approved by:
✔✔True - ✔✔T/F: The budget message should contain explanation of appropriation and
levy CAPS and a listing of appropriations split by CAP.
✔✔Budget Procedure - ✔✔Introduction & Approval, Public Advertisement, Public
Hearing, Amendments, Advertising & Public Hearing on Amendments, Adoption
✔✔Local Finance Board - ✔✔If a municipality does not have an Ethics board,
________________ would act a the Ethics Board.
✔✔Line Item Budget - ✔✔What is the official budget required to be adopted?
✔✔Utility Assessment Trust - ✔✔Payment of Utility Assessment Bond Principal is
recorded as an expenditure in which fund?
✔✔Apply to Amount to be Raised by taxation - ✔✔Which is not a proper way to
distribute a tax overpayment?
✔✔DCRP - ✔✔Town Administrator can be enrolled in
✔✔True - ✔✔T/F: 2010 CAP eliminated the add-on increases for the Reserve for
Uncollected Taxes.
✔✔True - ✔✔T/F: Transitional aid recipients must demonstrate that user fees have
been established for discretionary services, so that taxpayers are not subsidizing
nonessential programs.
, ✔✔shorter useful life - ✔✔Unexpended bond proceeds may not be appropriated to fund
additional capital improvement projects with a
✔✔storm recovery reserve - ✔✔Can be used for salt and sand purchases, snow
removal and salaries and
✔✔Water Capital fund - ✔✔In what fund is gross utility debt reflected in?
✔✔dedication by rider - ✔✔Amount of dedicated revenues is not subject to a
reasonably accurate estimate in advance
✔✔Modified accrual basis - ✔✔Method of accounting for transactions is
✔✔explanation of tax rate - ✔✔Not required to be included in budget message
✔✔EMMA - ✔✔Annual Financial statements must be filed with
✔✔overtime - ✔✔Not part of pensionable salary
✔✔True - ✔✔T/F: Payroll costs may be found in current fund, utility operating fund, trust
fund and general capital fund
✔✔Registered Municipal Accountant - ✔✔Every audit required by the Local Fiscal
Affairs Law is required to be completed by an accountant or auditor who holds an
uncanceled license as:
✔✔Chief Financial Officer - ✔✔The statutory responsibility for filing of the unaudited
Annual Financial Statements is assigned to which local government official
✔✔Planning Board - ✔✔As defined in the Local Government Ethics Law, a Local
government officer that serves on a local government agency that approved
development applications would refer to a member of
✔✔governing body - ✔✔The Local Fiscal Affairs Law mandates that the Cash
Management Plan be approved annually by the:
✔✔Bond maturities - ✔✔within the period or average period of usefulness, all bonds
shall mature in annual installments and the governing body may provide for a single and
combined bond issue.
✔✔20 days after the publication after adoption - ✔✔The effective date of a bond
ordinance is what length of time?
SOLUTIONS RATED A+
✔✔False - ✔✔T/F: The unexpended balance of debt service must be cancelled by
resolution.
✔✔False - ✔✔T/F: Capital Budget must be adopted by a majority of the governing body.
✔✔True - ✔✔T/F: Municipalities are permitted to negotiate with a vendor, after 2
attempts, responses to bids were too high and no bids were submitted.
✔✔True - ✔✔T/F: If Trust Assessment Fund cash is less than the required budgeted
amount to retire debt service, a required appropriation in the Current Fund budget is
necessary to cover the deficit.
✔✔performance based budgeting - ✔✔The number miles of roads in terms of
expenditures would be an example of
✔✔maturity schedule for bonds - ✔✔Which does not have to be included in the bond
ordinance?
✔✔2/3 of full membership - ✔✔Budget appropriation transfers during the last 2 months
of the calendar year requires which of the following votes?
✔✔DLGS approval of specification - ✔✔Which of the following would not be included in
specifications for banking services?
✔✔True - ✔✔T/F: Prepaid Taxes applied to Taxes Receivable does not create a
deferred charge
✔✔Items on municipal website for best practices - ✔✔3 years of adopted budgets,
proposed budget, most recent AFS
✔✔equalized valuation - ✔✔Represents the true value of all taxable property in the
municipality
✔✔derivatives - ✔✔Not a permissible investment
✔✔False - ✔✔T/F: Budget transfers may be made to: Deferred Charges, Reserve for
Uncollected Taxes, Down Payment on Improvements and Capital Improvement Fund
✔✔40 years - ✔✔Period of usefulness may not exceed
,✔✔DLGS - ✔✔____________ must approve: petty cash fund, change in title and text,
dedication by rider, and emergency appropriations in excess of 3% of operating
appropriations
✔✔Net debt - ✔✔Borrowing capacity is based on
✔✔Patrol cars - ✔✔Not bondable assets
✔✔$1000000 - ✔✔Local government bonds may be sold privately except when the total
of bonds is more than
✔✔eligible shared services - ✔✔Joint collection of taxes, joint municipal court, joint solid
waste collection/disposal
✔✔False - ✔✔T/F: Dedication by Rider must be accounted for in the current fund
✔✔governing body - ✔✔Special Improvement District budgets must be approved by:
✔✔True - ✔✔T/F: The budget message should contain explanation of appropriation and
levy CAPS and a listing of appropriations split by CAP.
✔✔Budget Procedure - ✔✔Introduction & Approval, Public Advertisement, Public
Hearing, Amendments, Advertising & Public Hearing on Amendments, Adoption
✔✔Local Finance Board - ✔✔If a municipality does not have an Ethics board,
________________ would act a the Ethics Board.
✔✔Line Item Budget - ✔✔What is the official budget required to be adopted?
✔✔Utility Assessment Trust - ✔✔Payment of Utility Assessment Bond Principal is
recorded as an expenditure in which fund?
✔✔Apply to Amount to be Raised by taxation - ✔✔Which is not a proper way to
distribute a tax overpayment?
✔✔DCRP - ✔✔Town Administrator can be enrolled in
✔✔True - ✔✔T/F: 2010 CAP eliminated the add-on increases for the Reserve for
Uncollected Taxes.
✔✔True - ✔✔T/F: Transitional aid recipients must demonstrate that user fees have
been established for discretionary services, so that taxpayers are not subsidizing
nonessential programs.
, ✔✔shorter useful life - ✔✔Unexpended bond proceeds may not be appropriated to fund
additional capital improvement projects with a
✔✔storm recovery reserve - ✔✔Can be used for salt and sand purchases, snow
removal and salaries and
✔✔Water Capital fund - ✔✔In what fund is gross utility debt reflected in?
✔✔dedication by rider - ✔✔Amount of dedicated revenues is not subject to a
reasonably accurate estimate in advance
✔✔Modified accrual basis - ✔✔Method of accounting for transactions is
✔✔explanation of tax rate - ✔✔Not required to be included in budget message
✔✔EMMA - ✔✔Annual Financial statements must be filed with
✔✔overtime - ✔✔Not part of pensionable salary
✔✔True - ✔✔T/F: Payroll costs may be found in current fund, utility operating fund, trust
fund and general capital fund
✔✔Registered Municipal Accountant - ✔✔Every audit required by the Local Fiscal
Affairs Law is required to be completed by an accountant or auditor who holds an
uncanceled license as:
✔✔Chief Financial Officer - ✔✔The statutory responsibility for filing of the unaudited
Annual Financial Statements is assigned to which local government official
✔✔Planning Board - ✔✔As defined in the Local Government Ethics Law, a Local
government officer that serves on a local government agency that approved
development applications would refer to a member of
✔✔governing body - ✔✔The Local Fiscal Affairs Law mandates that the Cash
Management Plan be approved annually by the:
✔✔Bond maturities - ✔✔within the period or average period of usefulness, all bonds
shall mature in annual installments and the governing body may provide for a single and
combined bond issue.
✔✔20 days after the publication after adoption - ✔✔The effective date of a bond
ordinance is what length of time?
