Acct365 Ch10
- 1.Which of the following groups or parties generally has taken the most initiative to evaluate the financial condition of a city?
- A.
Citizens
- B.
Managers
- C.
Credit market analysts
- D.
Legislative and oversight bodies
- 2.Which oof the following terms or concepts focuses primarily on a government's ability to generate enough cash over a 30- or 60- day period ti pay bills?
- A.
Interperiod equity
- B.
Financial condition
- C.
Budgetary solvency
- D.
Cash solvency
- 3.Which of the following environmental factors reveals the entity's underlying philosophies regarding willingness to support higher taxes, issuances of long-term debt, and increased social services?
- A.
Political culture
- B.
Community needs and resources
- C.
External economic conditions
- D.
Management practices and legislative policies
- 4.The group of factors that largely determines how fiscal policy is influenced by environmental factors is:
- A.
Natural disasters and emergencies
- B.
Unfunded liabilities
- C.
External economic conditions
- D.
Management practices and legislative policies
- 5.Which of the following would be an effective means of benchmarking?
- A.
Comparing the city's key ratios to those of special purpose governments in the area.
- B.
Comparing current-period ratios to published medians of the same ratios for cities of similar size or in the same geographic region.
- C.
Comparing key ratios to published medians of the same ratios for larger cities in other parts of the country.
- D.
Comparing current-period ratios to estimates for future periods.
- 6.Which of the following conditions could signal impending fiscal stress?
- A.
Decreasing unemployment
- B.
Increasing property values
- C.
Decreasing revenues relative to expenditures
- D.
Decreasing levels of unfunded pension obligations and other post employment retirement benefits
- 7.Credit rating agencies such as Moody's, Standard & Poor's, and Fitch examine which of the following factors when assessing creditworthiness for purposes of rating tax-supported bonds?
- A.
Economy, finances, management, service capacity
- B.
Finances, management, service capacity, debt
- C.
Management, service capacity, debt, education
- D.
Demographics, finances, management, debt
- 8.Which of the following statements is correct regarding the relationship between financial condition and economic condition?
- A.
As defined by GASB, economic, condition is a broader term that would include the concepts embedded in the term financial condition
- B.
Financial condition as defined by the ICMA incorporates cash solvency, budgetary solvency, long-run solvency, and service-level solvency, making it broader than the term economic condition
- C.
Financial condition and economic condition relate to the government's ability to meet its short-term obligations
- D.
None of the above
- 9.Which of the following suggests a government that is relying primarily on revenues it directly controls?
- A.
Property taxes, 20%; chargers for services, 70%; grants and contributions, 5%, investment income, 5%
- B.
Property taxes, 20%; chargers for services, 60%; grants and contributions, 10%, investment income, 10%
- C.
Property taxes, 40%; chargers for services, 40%; grants and contributions, 10%, investment income, 10%
- D.
Property taxes, 60%; chargers for services, 5%; grants and contributions, 30%, investment income, 5%
- 10.Which of the following best defines fiscal capacity?
- A.
The probability that a government will meet its financial obligations and sustain services in the future
- B.
The ability and willingness of the government to meet its obligations when they are due
- C.
The government's ability and willingness to provide services
- D.
Current assets are sufficient to pay current liabilites
- 11.The term that is defined as determining whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided is:
- A.
Financial position
- B.
Interperiod equity
- C.
Financial condition
- D.
Economic condition
- 12.The term that is closely related to the concept of liquidity is:
- A.
Financial position
- B.
Interperiod equity
- C.
Financial condtion
- D.
Economic condition
- 13.Which of the following trends is most likely to be a signal of impending fiscal stress?
- A.
An increasing ratio of own source revenues to total revenues.
- B.
A decreasing ratio of total revenues to total expenditures.
- C.
A decreasing ratio of debt service expenditures to operating revenues.
- D.
A decreasing ratio of operating expenditures to total revenues.
- 14.One of the most important reasons to evaluate the financial performance of a government is to:
- A.
Determine if property taxes and other revenue sources should be increased.
- B.
Assign responsibility for success or failure of the government to certain parties.
- C.
Determine whether the government is accomplishing its mission.
- D.
Have an early warning of impending financial difficulty for a diverse set of decision makers.
- 15.A term that describes a government's ongoing ability and willingness to raise revenues, incur debt, and meet its financial obligations
- A.
Financial condition.
- B.
Fiscal capacity.
- C.
Economic condition.
- D.
Financial position.
- 16.Which of the following is not a typical reason why people evaluate a government's financial condition?
- A.
Prevent financial crises from developing.
- B.
Hold management accountable for the use of tax revenues.
- C.
Determine if the government can continue to offer the current level of services.
- D.
Determine whether residents will receive dividends.
- 17.The key cause of municipal financial crises is the failure of management to raise taxes quickly enough in response to adverse environmental factors.
- A.
True
- B.
False
- 18.A tax watchdog group is an example of an intermediary that represents citizen interests.
- A.
True
- B.
False
- 19.The term financial position is closely related to the term liquidity while financial condition is much broader in scope, including not only financial position but also consideration of long-term solvency.
- A.
True
- B.
False
- 20.Cash solvency is the government's long-run ability to pay all the costs of doing business.
- A.
True
- B.
False
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