Principals of Financial Management
Exam Questions and Answers Graded A+
New Jersey Statutes Annotated - Correct answer-- N.J.S.A.40A: 2-1, et. seq. -
Local Bond Law
- N.J.S.A.40A: 4-1, et. seq. - Local Budget Law
- N.J.S.A.40A:5-1, et. seq. - Local Fiscal Affairs Law
- N.J.S.A. 40A:11-1, et. seq.- Local Public Contracts Law
- N.J.S.A. 40A: 2-1, et. seq. - Local Bond Law
- 40A - Stands for the Title of the statutory citation
- 2 - Stands for the Chapter of the statutory citation
- 1 - Stands for the Section of the statutory citation
Technical Accounting Directives (1) - Correct answer-TAD 85-1 (N.J.A.C. 5:30-
5.2)- promulgated by the
Division of Local Government Services requires that an encumbrance accounting
system be set up for the current fund (updated by Local Finance Notice CFO 2003-
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,13 to be used for all funds). Per this directive by the DLGS is the requirement that
every municipality must develop and utilize a minimum purchasing system.
Technical Accounting Directives (2) - Correct answer-TAD 85-2 (N.J.A.C. 5:30-
5.6)- promulgated by the
Division of Local Government Services requires that each municipality must
maintain a fixed assets accounting system (fixed assets account group). The
threshold for fixed assets is $5,000 for each individual asset, but the threshold can
be less if the municipality so desires
Technical Accounting Directives (3) - Correct answer-TAD 85-3 (N.J.A.C. 5:30-
5.7)- promulgated by the
Division of Local Government Services requires that a municipality maintain a
general ledger for at least the current fund (updated by Local Finance Notice CFO
2003-13 to be used for all funds).
GASB Requirements - Correct answer-GASB 34 - Setup an infrastructure of items
to be inventoried
GASB 45 - Other Post Employment Benefits (OPEB)
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Local Finance Notice Implementation - Correct answer-- Issued by the Local
Finance Board, these are items that are issued by the Local Finance Board
concerning the work of the Division of Local Government Services and the
problems of local government, requirements of law and regulations, along with
recommendations for improvement
Examples would be:
1. information on B.R.C.'s
2. changes to the CAP Law
3. new CAP exceptions.
Debt Issuance and Management - Correct answer-The Local Bond Law provides
that a county may incur debt within certain limitations.
The debt limit for a county in New Jersey is 2%; which
means that a county's net debt limit may not exceed 2% of the average of the prior
3 years state equalized assessed real property valuations.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Exam Questions and Answers Graded A+
New Jersey Statutes Annotated - Correct answer-- N.J.S.A.40A: 2-1, et. seq. -
Local Bond Law
- N.J.S.A.40A: 4-1, et. seq. - Local Budget Law
- N.J.S.A.40A:5-1, et. seq. - Local Fiscal Affairs Law
- N.J.S.A. 40A:11-1, et. seq.- Local Public Contracts Law
- N.J.S.A. 40A: 2-1, et. seq. - Local Bond Law
- 40A - Stands for the Title of the statutory citation
- 2 - Stands for the Chapter of the statutory citation
- 1 - Stands for the Section of the statutory citation
Technical Accounting Directives (1) - Correct answer-TAD 85-1 (N.J.A.C. 5:30-
5.2)- promulgated by the
Division of Local Government Services requires that an encumbrance accounting
system be set up for the current fund (updated by Local Finance Notice CFO 2003-
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,13 to be used for all funds). Per this directive by the DLGS is the requirement that
every municipality must develop and utilize a minimum purchasing system.
Technical Accounting Directives (2) - Correct answer-TAD 85-2 (N.J.A.C. 5:30-
5.6)- promulgated by the
Division of Local Government Services requires that each municipality must
maintain a fixed assets accounting system (fixed assets account group). The
threshold for fixed assets is $5,000 for each individual asset, but the threshold can
be less if the municipality so desires
Technical Accounting Directives (3) - Correct answer-TAD 85-3 (N.J.A.C. 5:30-
5.7)- promulgated by the
Division of Local Government Services requires that a municipality maintain a
general ledger for at least the current fund (updated by Local Finance Notice CFO
2003-13 to be used for all funds).
GASB Requirements - Correct answer-GASB 34 - Setup an infrastructure of items
to be inventoried
GASB 45 - Other Post Employment Benefits (OPEB)
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Local Finance Notice Implementation - Correct answer-- Issued by the Local
Finance Board, these are items that are issued by the Local Finance Board
concerning the work of the Division of Local Government Services and the
problems of local government, requirements of law and regulations, along with
recommendations for improvement
Examples would be:
1. information on B.R.C.'s
2. changes to the CAP Law
3. new CAP exceptions.
Debt Issuance and Management - Correct answer-The Local Bond Law provides
that a county may incur debt within certain limitations.
The debt limit for a county in New Jersey is 2%; which
means that a county's net debt limit may not exceed 2% of the average of the prior
3 years state equalized assessed real property valuations.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
