Financial Management and Budgeting Flashcards

A park district receives an unexpected $50,000 donation restricted to playground equipment. How should this be classified in the budget?

Answer: Restricted fund revenue

Donations with donor-imposed restrictions must be classified as restricted fund revenue and spent only for the designated purpose.

Which budgeting approach requires each department to justify every expenditure from zero rather than using the prior year as a baseline?

Answer: Zero-based budgeting

Zero-based budgeting starts from a 'zero base' and requires justification for all expenses regardless of prior year spending.

A recreation center's cost recovery ratio is 65%. What does this mean?

Answer: 65% of program costs are covered by direct program revenues

A cost recovery ratio of 65% means that 65% of the program's direct costs are offset by revenues generated from that program.

Which of the following is an example of a variable cost in parks and recreation operations?

Answer: Supply costs per program participant

Variable costs change in proportion to activity levels; supply costs per participant increase as enrollment increases.

What is the purpose of an encumbrance in government accounting?

Answer: To reserve funds for an anticipated purchase before payment is made

An encumbrance reserves budget authority when a purchase order is issued, preventing those funds from being committed elsewhere.

A parks agency uses an enterprise fund for its golf course. What distinguishes an enterprise fund from the general fund?

Answer: Enterprise funds are intended to be self-supporting through user fees

Enterprise funds operate like a business, designed to recover costs through charges to users rather than relying on tax revenue.

When conducting a fees and charges study, the first step is typically to:

Answer: Identify the full cost of delivering each service

You must know the true full cost of a service before you can make informed decisions about how much to charge or subsidize.