Glossary of PMGT 321 Public Finance
Other Decks By This User
- 5 types of Expenditures
5-Tax expenditures and Credits
- What are the two types of authority for spending?
- 1-Ability to act often through enabling legislation
2-Ability to spend through appropriations
- What is Allocation?
- Lease common expenditure authority--lump sum authority where the administrator decides how to allocate the funds.
- What is Apportionment?
- The distribution of expenditure authority for a specific time period.
- What is Allotment?
- The most common expenditure authority--communicate most of authority directly to subordinates.
- Obligation spending?
- it is legally binding to the responsibity to pay
- Commitment spending?
- Contracts, entitlement notices, etc....sometimes irrevocable
- What are the 5 forms of payment in public sector?
- 1-Petty Cash
3-Directly from an account
5-From an unrestricted account.
- What must be considered when purchasing?
- 1-What to buy (need)
2-Is it authoriezed in the budget
3-Written standards (specifications)
- What are the two types of management for purchasing?
- Decentralized and Centralized
- Does decentralized purchasing have written standards?
- Less likely then centralized.
- Are decentralized purchasing decisions linked to budget or accounting systems?
- Not necessarily
- Which purchasing system is cheaper and more often used by public organizations?
- What is the main drawback to decentralized purchasing systems?
- Quality and integrity control of goods and services are often lacking.
- Who is responsible for purchasing in centralized systems?
- A single person or department specializing in purchasing.
- Who is drafts policies and oversees function in centralized systems?
- Policy Board or group
- What is the main drawback of a centralized purchasing system?
- Often Slower
- What are the two types of interest?
- Simple and Compound
- What is simple interest?
- Interest paid only on the principal amount
- What is compound interest?
- Interest paid on both the principal and interest
- What three factors do you need to look to when analyzing cash flow?
- Source, Amount & Date
- What is the formula for calculating the time value of money?
Futer value= Present Value times one plus the rate raised to the number of periods
- What are the 4 concerns with investments?
4-Size of Investment
- What are the 3 types Risk?
- 1-Default Risk
- What is Default Risk?
- Probability that the issuer will be unable to redeem the investment
- What is Market Risk?
- Possibility of loss from choosing a relatively poor investment from all available investments
- What is Liquidity Risk?
- Occurs when invested money cannot be collected immediately even though the money is safe
- What does risk do to the rate?
- High Risk=High Rate
Low Risk=Low Rate
- What is Liquidity?
- Ability to readily convert to cash
- What is Yield?
- The rate of return above the initial investment
- How can the size of investment be defined?
- Larger investments generally are associated with higher return, fewer transaction costs.
- What are the 3 types of investments?
3-Money Market/Mutual Fund
- What is Capital BUdgeting?
- A plan for the funding, acquisition, and development of public land, improvements, equipment, and facilities for use in the immediate, intermediate, and long-term future.
- What are the two ways to finance Capital Budgeting?
- Pay-as-you-go and Pay-as-you-use
- What is Pay-as-you-go?
- raise all the money and pay as you go
- What is Pay as you use?
- Go into debt have those who use the facility pay fees to pay off the building.
- What is Debt?
- Debt is an outstanding obligation to the government.
- What is a deficit?
- expenditures that are greater than revenues
- What are the 4 types of obligation?
- 1- General
2- Limited Liability
4- No Obligation
- What is General Obligation?
- You have it you pay it even if it means raising taxes
- What is Limited Liability Obligation?
- Use Specific fees to pay for the debt
- What is Moral Obligation?
- Moral Obligation when there is no formal pledge but you put your name on it and if you don't pay your credit goes really low
- What is Risk Management?
- A systematic organized effort to eliminate or reduce harm to persons and the threat of losses to public organizations
- What 4 factors should be considered when evaluating risks?
- 1-Frequency and Severity
2-what costs are associated
3-what can the organization do to reduce the risk and how much will it cost?
4-Is it worth the cost to reduce the risk?
- What are some examples of risks?
- Liability, personnel, property loss, vehicular operation
- What are some ways to minimize risks?
- Insure, eliminate risk, transfer legal responibility
- What are some examples of overhead costs
- Unemployment insurance, workers comp, cost of personnel department
- What is an overhead cost?
- the cost that employors must paya on their employees
- What is Managerial Efficiency?
- Ratio of outputs to inputs
- What is Economic Efficiency?
- if it is not possibly to change the state and have someone better off and no one worse off
- What is Effectiveness?
- measure of attainment (comparing observed output to planned output)
- What is Productivity?
- Amount of output per input
- What are the two types of Audits?
- Internal and External
- What is an Internal Audit?
- audit done by a department or person who is part of the organization
-done for management or planning
- What is an External Audit?
- Done by people that are outside of the organization
-mainly financial audits
-used by most local governments
- Audit Focus: Financial?
- Assess the fairness and reliability of finances
- Audit Focus: Compliance?
- Laws and regulations are followed
- Audit Focus: Economy/Efficiency?
- resource use
- Audit Focus: Performance/Program Results
- achievement relative to goals
- What are the 3 main roles of government?
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