1. Evaluation of government financial performance is important for which of the following reasons?

Credit analysts use it to determine whether bonds should be issued.

Investors use it to make decisions about bond investments.

Oversight bodies use it to develop new laws.

Managers use it to evaluate day to day operations.

2. Which of the following terms or concepts focuses primarily on a government’s ability to generate enough cash over a 30- or 60-day period to pay its bills?

Interperiod equity.

Financial position.

Budgetary solvency.

Cash solvency.

3. Why does GASB prefer to use the term economic condition rather than financial condition?

Economic condition considers the probability that the government will meet both financial and service obligations currently and in the future but financial condition does not.

Financial condition does not consider the ability to maintain service levels.

Economic condition focuses on both the ability and willingness to meet financial and service obligations.

Financial condition focuses primarily on liquidity

4. Factors that influence a government’s financial condition include which of the following?

Financial factors, such as governmental fund financial ratios.

Environmental factors, such as community needs and resources.

Organizational factors, such as management practices and legislative policies.

All of the above.

5. 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?

Political culture.

Community needs and resources.

External economic conditions.

Management practices and legislative policies

6. Which of the following would be an effective means of benchmarking?

Comparing the city’s key ratios to those of special purpose governments in the area.

Comparing current-period ratios to published medians of the same ratios for cities of similar size or in the same geographic region.

Comparing key ratios to published medians of the same ratios for larger cities in other parts of the country.

Comparing current-period ratios to estimates for future periods

7. Which of the following conditions could signal decreasing fiscal stress?

Increasing unemployment.

Decreasing property values.

Increasing revenues relative to expenditures.

Increasing levels of unfunded pension obligations and other postemployment retirement benefits

8. Rating agencies, such as FitchRatings, Moody's Investor Service and Standard & Poor's, produce bond ratings that

are created using the exact same measures and weights.

allow users to know how much better one issuing entity's financial condition is than another's.

focus both on quantitative and qualitative factors using proprietary models.

are intended to be precise indicators of the government's long-term financial condition.

9. Which of the following suggests a government that is relying primarily on revenues it directly controls?

Property taxes, 20%; charges for services, 70%; grants and contributions, 5%; investment income, 5%.

Property taxes, 20%; charges for services, 60%; grants and contributions, 10%; investment income, 10%.

Property taxes, 40%; charges for services, 40%; grants and contributions, 10%; investment income, 10%.

Property taxes, 60%; charges for services, 5%; grants and contributions, 30%; investment income, 5%

10. What is Electronic Municipal Market Access or EMMA?

A library based service that provides information about state and local governments that have issued debt.

A fee based service that provides information to investors and credit analysts about government bond issues.

An online service that allows users to learn more about the municipal securities market.

A source of municipal finance information developed by the Securities and Exchange Commission