Question 1

In the government-wide financial statements, the assets acquired under a capital lease would be reported at

Accepted Answer

A) The total of all payments required under the lease. 
B) The present value of the required lease payments. 
C) The undiscounted total of required lease payments. 
D) They are not reported in the government-wide financial statements. 
A) The total of all payments required under the lease. 
B) The present value of the required lease payments. 
C) The undiscounted total of required lease payments. 
D) They are not reported in the government-wide financial statements.

Question 2

A government's debt margin is the difference between its authorized debt limit and its outstanding debt.

Accepted Answer

A) True 
 B)False

Question 3

Tax anticipation notes (TANs)must be reported as current liabilities of the governmental funds in which the related revenues will be reported, as well as in the government-wide statements.

Accepted Answer

A) True 
 B)False

Question 4

To seek protection under the Federal Bankruptcy Code, a government must

Accepted Answer

A) Be unable to provide the level of services it has provided in the recent past. 
B) Be unable to pay its debts in the current year. 
C) Have budgeted expenditures in excess of revenues. 
D) Both (b)and (c). 
A) Be unable to provide the level of services it has provided in the recent past. 
B) Be unable to pay its debts in the current year. 
C) Have budgeted expenditures in excess of revenues. 
D) Both (b)and (c).

Question 5

Obligations of property owners within a particular government for their proportionate share of debts of other governments with whom their government shares boundaries are called

Accepted Answer

A) Overlapping debt. 
B) Conduit debt. 
C) Committed debt. 
D) Moral obligation debt. 
A) Overlapping debt. 
B) Conduit debt. 
C) Committed debt. 
D) Moral obligation debt.

Question 6

Overlapping debt should be reported in which of the following ways?

Accepted Answer

A) It should be reported in the schedule of changes in long-term obligations. 
B) It should be disclosed as a note to the financial statements. 
C) It should be reported in a schedule in the statistical section of the annual report. 
D) It should not be reported anywhere in the annual report. 
A) It should be reported in the schedule of changes in long-term obligations. 
B) It should be disclosed as a note to the financial statements. 
C) It should be reported in a schedule in the statistical section of the annual report. 
D) It should not be reported anywhere in the annual report.

Question 7

A government that is unable to satisfy claims against it

Accepted Answer

A) Is prohibited from filing bankruptcy. 
B) May seek protection under the Federal Bankruptcy Code, using the same section that is used by businesses. 
C) May seek protection under the Federal Bankruptcy Code, using a special section directed to governments. 
D) Is automatically placed under the jurisdiction of a higher level of government. 
A) Is prohibited from filing bankruptcy. 
B) May seek protection under the Federal Bankruptcy Code, using the same section that is used by businesses. 
C) May seek protection under the Federal Bankruptcy Code, using a special section directed to governments. 
D) Is automatically placed under the jurisdiction of a higher level of government.

Question 8

Industrial development bonds are issued in the name of a government with the proceeds used to attract private businesses to a community.Which of the following is a true statement about industrial development bonds?

Accepted Answer

A) The proceeds are used by the private corporations and principal and interest payments are made by the private corporation.The government backs the bonds in the event of default by the private corporation. 
B) The proceeds are used by the private corporations and principal and interest payments are made by the private corporation.The government does not back the bonds in the event of default by the private corporation. 
C) The proceeds are used by the government to build infrastructure to service private corporations, with principal and interest payments made by the government out of the additional tax revenues received from the private corporation. 
D) The proceeds are used by the government to build infrastructure to service private corporations, with principal and interest payments made by the private corporation in lieu of property taxes. 
A) The proceeds are used by the private corporations and principal and interest payments are made by the private corporation.The government backs the bonds in the event of default by the private corporation. 
B) The proceeds are used by the private corporations and principal and interest payments are made by the private corporation.The government does not back the bonds in the event of default by the private corporation. 
C) The proceeds are used by the government to build infrastructure to service private corporations, with principal and interest payments made by the government out of the additional tax revenues received from the private corporation. 
D) The proceeds are used by the government to build infrastructure to service private corporations, with principal and interest payments made by the private corporation in lieu of property taxes.

Question 9

Which of the following funds is most likely to receive the proceeds of revenue bonds?

Accepted Answer

A) General fund. 
B) Capital projects fund. 
C) City utility enterprise fund. 
D) Highway department special revenue fund. 
A) General fund. 
B) Capital projects fund. 
C) City utility enterprise fund. 
D) Highway department special revenue fund.

Question 10

A government is prohibited from ever recognizing bond anticipation notes (BANs)as long-term obligations.

Accepted Answer

A) True 
 B)False

Question 11

Obligations issued in the name of a government on behalf of a nongovernmental entity are called

Accepted Answer

A) Overlapping debt. 
B) Conduit debt. 
C) Committed debt. 
D) Moral obligation debt. 
A) Overlapping debt. 
B) Conduit debt. 
C) Committed debt. 
D) Moral obligation debt.

Question 12

Why is information about long-term debt important to financial statement users?

Accepted Answer

Information on long-term debt is especia

Question 13

Which of the following is likely to be used by a bond rating agency to rate a government's general obligation bonds?

Accepted Answer

A) A review of the basic financial statements. 
B) Consideration of economic statistics such as unemployment rates. 
C) Consideration of legal debt margin. 
D) All of the above. 
A) A review of the basic financial statements. 
B) Consideration of economic statistics such as unemployment rates. 
C) Consideration of legal debt margin. 
D) All of the above.

Question 14

When the proceeds of general long-term debt are received by a governmental fund, rather than reporting a liability on the balance sheet, the inflow of resources is treated as an other financing source on the operating statement.

Accepted Answer

A) True 
 B)False

Question 15

The work of bond rating agencies is important because

Accepted Answer

A) They ensure that all principal and interest payments on bonds issued will be made. 
B) The rating they assign proves the quality of a particular debt instrument. 
C) They affect the debt's marketability and hence its interest rate. 
D) Bonds cannot be issued without them. 
A) They ensure that all principal and interest payments on bonds issued will be made. 
B) The rating they assign proves the quality of a particular debt instrument. 
C) They affect the debt's marketability and hence its interest rate. 
D) Bonds cannot be issued without them.

Question 16

In November 2014, the Frost City issued $3 million in 6 percent TANs, payable in April 2015.In what fund or fund type should the city report the TANs on its December 31, 2014 financial statements? Explain, indicating any additional information you would need.

Accepted Answer

Tax anticipation notes (TANs)a

Question 17

When the proceeds of long term debt are reported in governmental fund financial statements

Accepted Answer

A) They are reported only as an increase in liabilities in the funds. 
B) They are reported only as revenues in the funds. 
C) They are reported only as an other financing source-debt proceeds. 
D) They are reported only as an other financing use-debt proceeds. 
A) They are reported only as an increase in liabilities in the funds. 
B) They are reported only as revenues in the funds. 
C) They are reported only as an other financing source-debt proceeds. 
D) They are reported only as an other financing use-debt proceeds.

Question 18

General long-term debt of a government includes

Accepted Answer

A) All future financial obligations. 
B) All future financial obligations that result from past transactions. 
C) All future financial obligations that result from past transactions for which the government has already received a benefit. 
D) All future financial obligations that are backed by the government's general credit and revenue raising power and that result from past transactions for which the government has already received a benefit. 
A) All future financial obligations. 
B) All future financial obligations that result from past transactions. 
C) All future financial obligations that result from past transactions for which the government has already received a benefit. 
D) All future financial obligations that are backed by the government's general credit and revenue raising power and that result from past transactions for which the government has already received a benefit.

Question 19

In accounting for operating leases, the rental payments should be recognized as expenditures in a governmental fund and as expenses in the government-wide statement of activities in the periods in which they apply.

Accepted Answer

A) True 
 B)False

Question 20

Voters of Valdez School District, a public school district, approved construction of a new high school at a cost not to exceed $20 million.The district will finance the construction by issuing $20 million of 6 percent term bonds payable in 20 years.Because the site had already been prepared, the school district began construction immediately but the bonds would not be issued for nearly a year.Shortly before the fiscal year-end, the school district borrowed $5 million from a local bank due in one year with interest at 6.2 percent.The note will be repaid from bond proceeds.The school district secured a financing agreement with the bank to convert the debt to a 10-year debt if the school district is unable to sell the bonds by the due date.At year-end, how should the $5 million note be displayed in the governmental fund financial statements?

Accepted Answer

A) Capital projects fund-Notes payable $5 million; Nothing in the schedule of changes in long-term obligations. 
B) Capital projects fund-Notes payable $5 million; $15 million in the schedule of changes in long-term obligations. 
C) Capital projects fund-Encumbrances of $5 million; $15 million in the schedule of changes in long-term obligations. 
D) Nothing in the capital projects fund AND $5 million notes payable in the schedule of Changes in long-term obligations. 
A) Capital projects fund-Notes payable $5 million; Nothing in the schedule of changes in long-term obligations. 
B) Capital projects fund-Notes payable $5 million; $15 million in the schedule of changes in long-term obligations. 
C) Capital projects fund-Encumbrances of $5 million; $15 million in the schedule of changes in long-term obligations. 
D) Nothing in the capital projects fund AND $5 million notes payable in the schedule of Changes in long-term obligations.

In the government-wide financial statements, the assets acquired under a capital lease would be reported at

A government's debt margin is the difference between its authorized debt limit and its outstanding debt.

Tax anticipation notes (TANs)must be reported as current liabilities of the governmental funds in which the related revenues will be reported, as well as in the government-wide statements.

To seek protection under the Federal Bankruptcy Code, a government must

Obligations of property owners within a particular government for their proportionate share of debts of other governments with whom their government shares boundaries are called

Overlapping debt should be reported in which of the following ways?

A government that is unable to satisfy claims against it

Industrial development bonds are issued in the name of a government with the proceeds used to attract private businesses to a community.Which of the following is a true statement about industrial development bonds?

Which of the following funds is most likely to receive the proceeds of revenue bonds?

A government is prohibited from ever recognizing bond anticipation notes (BANs)as long-term obligations.

Obligations issued in the name of a government on behalf of a nongovernmental entity are called

Why is information about long-term debt important to financial statement users?

Which of the following is likely to be used by a bond rating agency to rate a government's general obligation bonds?

When the proceeds of general long-term debt are received by a governmental fund, rather than reporting a liability on the balance sheet, the inflow of resources is treated as an other financing source on the operating statement.

The work of bond rating agencies is important because

In November 2014, the Frost City issued $3 million in 6 percent TANs, payable in April 2015.In what fund or fund type should the city report the TANs on its December 31, 2014 financial statements? Explain, indicating any additional information you would need.

When the proceeds of long term debt are reported in governmental fund financial statements

General long-term debt of a government includes

In accounting for operating leases, the rental payments should be recognized as expenditures in a governmental fund and as expenses in the government-wide statement of activities in the periods in which they apply.

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters

Exam 8: Long-Term Obligations

In the government-wide financial statements, the assets acquired under a capital lease would be reported at

A government's debt margin is the difference between its authorized debt limit and its outstanding debt.

Tax anticipation notes (TANs)must be reported as current liabilities of the governmental funds in which the related revenues will be reported, as well as in the government-wide statements.

To seek protection under the Federal Bankruptcy Code, a government must

Obligations of property owners within a particular government for their proportionate share of debts of other governments with whom their government shares boundaries are called

Overlapping debt should be reported in which of the following ways?

A government that is unable to satisfy claims against it

Industrial development bonds are issued in the name of a government with the proceeds used to attract private businesses to a community.Which of the following is a true statement about industrial development bonds?

Which of the following funds is most likely to receive the proceeds of revenue bonds?

A government is prohibited from ever recognizing bond anticipation notes (BANs)as long-term obligations.

Obligations issued in the name of a government on behalf of a nongovernmental entity are called

Why is information about long-term debt important to financial statement users?

Which of the following is likely to be used by a bond rating agency to rate a government's general obligation bonds?

When the proceeds of general long-term debt are received by a governmental fund, rather than reporting a liability on the balance sheet, the inflow of resources is treated as an other financing source on the operating statement.

The work of bond rating agencies is important because

In November 2014, the Frost City issued $3 million in 6 percent TANs, payable in April 2015.In what fund or fund type should the city report the TANs on its December 31, 2014 financial statements? Explain, indicating any additional information you would need.

When the proceeds of long term debt are reported in governmental fund financial statements

General long-term debt of a government includes

In accounting for operating leases, the rental payments should be recognized as expenditures in a governmental fund and as expenses in the government-wide statement of activities in the periods in which they apply.

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters