Question 1

A major exception to the general rule of expenditure accrual for governmental funds of a state or local government relates to unmatured

Accepted Answer

The answer of A major exception to the general rule...

Question 2

Overlapping debt refers to the obligations of property owners within a government's boundaries for their proportionate share of the debt of other governments with overlapping geographic boundaries.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Olden City entered into a capital lease agreement as a lessee for several new dump trucks to be used in general government activities. The city maintains its books and records in a manner that facilitates the preparation of the fund financial statements. Which of the following is true?

Accepted Answer

A)  The title of the asset is transferred to Olden City. 
B)  The lease is recorded as a long-term liability at the present value of the lease. 
C)  The interest expenditure would be recorded on the government-wide financial statements. 
D)  The term of the lease is specified in the lease contract without consideration of cancellation options. 
A)  The title of the asset is transferred to Olden City. 
B)  The lease is recorded as a long-term liability at the present value of the lease. 
C)  The interest expenditure would be recorded on the government-wide financial statements. 
D)  The term of the lease is specified in the lease contract without consideration of cancellation options.

Question 5

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 6

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 7

Which of the following is not likely to be a reason why a government might obtain an asset through an operating lease? The government

Accepted Answer

A)  Does not have enough cash or credit to purchase the asset. 
B)  Wishes to avoid the risk of owning an asset that has become obsolete and cannot be sold. 
C)  Believes the total value of assets reported in the schedule of changes in capital assets is already too high. 
D)  Needs the asset for only a small part of its useful life. 
A)  Does not have enough cash or credit to purchase the asset. 
B)  Wishes to avoid the risk of owning an asset that has become obsolete and cannot be sold. 
C)  Believes the total value of assets reported in the schedule of changes in capital assets is already too high. 
D)  Needs the asset for only a small part of its useful life.

Question 8

Flora City financed the construction of sidewalks in a newly annexed subdivision by issuing $50 million in special assessment debt. The debt is to be serviced entirely by assessments against the subdivision's property owners. The government does not have any obligation for the debt and has not guaranteed it. Nevertheless, when the property owners in a nearby subdivision were unable to pay their required assessments, the city, fearful of damaging its own credit rating, serviced the debt using its own resources. Should the city report the $50 million in special assessment debt in its government-wide statement of net position? Explain, citing specific GASB provisions.

Accepted Answer

Yes. The government should report the sp

Question 9

Governments may enter into operating leases, but may not enter into capital leases.

Accepted Answer

A) True 
 B)False

Question 10

General obligation debt is the obligation of the government at large and is thereby backed by the government's "full faith and credit" and revenue-raising powers.

Accepted Answer

A) True 
 B)False

Question 11

Salvador County issued $25 million of 5 percent demand bonds for construction of a county maintenance building. The county has no take-out agreement related to the debt. It estimates that 20 percent of the bonds would be demanded (called) by the buyers if interest rates increased by at least one percentage point. At year-end, rates on comparable debt were 7 percent. How should these demand bonds be reported in the governmental fund financial statements at year-end?

Accepted Answer

A)  $25 million in the capital projects fund. 
B)  $5 million in the capital projects fund AND $20 million would be reported in the schedule of changes in long-term obligations. 
C)  $20 million in the capital projects fund AND $5 million would be reported in the schedule of changes in long-term obligations. 
D)  $25 million in the schedule of changes in long-term obligations. 
A)  $25 million in the capital projects fund. 
B)  $5 million in the capital projects fund AND $20 million would be reported in the schedule of changes in long-term obligations. 
C)  $20 million in the capital projects fund AND $5 million would be reported in the schedule of changes in long-term obligations. 
D)  $25 million in the schedule of changes in long-term obligations.

Question 12

In November 2017, the Frost City issued $3 million in 6 percent TANs, payable in April 2018. In what fund or fund type should the city report the TANs on its December 31, 2017 financial statements? Explain, indicating any additional information you would need.

Accepted Answer

Tax anticipation notes (TANs)

Question 13

During the fiscal year ended 6/30/18, the Harris City engaged in the following transactions.
REQUIRED: Assume that the city maintains its books and records in a manner that facilitates the preparation of its governmental fund financial statements. Prepare all necessary journal entries that the city should make for each transaction. Clearly indicate in which fund the entry is being made. If no entry is required, write "No entry required."
a) In July 2017, the city issued $30 million in 6% general obligation term bonds to finance construction of a new building to house city offices. The bonds were issued at a premium of $300,000.
b) In September 2017, the city transferred $1.5 million from the general fund to cover the $0.9 million principal and $0.6 million interest payments due that month on debt issued in previous years.
c) In September 2017, the city paid the principal and interest due from (b).
d) In June 2018, the city transferred $3 million from the general fund to cover the $1.8 million interest payment and the $1.2 million principal payment due in July 2018 on the bonds issued in (a).

Accepted Answer

@#IMG-DLM& [If this optional entry is ma

Question 14

Because they are not obligations of the government at large, revenue bonds are usually not subject to voter approvals or other forms of voter oversight.

Accepted Answer

A) True 
 B)False

Question 15

Terry City is considering issuing $50 million in debt to finance construction of a new sewer system. REQUIRED: Compare the possible financial effects of the city's decision to finance the new system with
(a) General obligation debt
(b) State-issued sewer revolving bond fund debt, which carries the moral obligation of the state in addition to being a primary obligation of the city through its loan payments to the state
(c) The city's own sewer revenue bonds, or
(d) General obligation debt insured by a company specializing in municipal bond insurance.

Accepted Answer

a) The city's general obligation debt wo

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

GASB Statement No 87 requires specifies which of the following

Accepted Answer

A)  Leases one year or more in length must be accounted for as a financing lease 
B)  The lessee account for the lease as if it had purchased the rights to the asset and borrowed the purchase price. 
C)  The treatment of leases of buildings, land and equipment, but excludes the treatment of intangible assets 
D)  All of the above. 
A)  Leases one year or more in length must be accounted for as a financing lease 
B)  The lessee account for the lease as if it had purchased the rights to the asset and borrowed the purchase price. 
C)  The treatment of leases of buildings, land and equipment, but excludes the treatment of intangible assets 
D)  All of the above.

Question 18

Unlike individuals and businesses, governments cannot seek protection under the Federal Bankruptcy Code.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Revenue debt is secured only by designated revenue streams.

Accepted Answer

A) True 
 B)False

A major exception to the general rule of expenditure accrual for governmental funds of a state or local government relates to unmatured

Overlapping debt refers to the obligations of property owners within a government's boundaries for their proportionate share of the debt of other governments with overlapping geographic boundaries.

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

Olden City entered into a capital lease agreement as a lessee for several new dump trucks to be used in general government activities. The city maintains its books and records in a manner that facilitates the preparation of the fund financial statements. Which of the following is true?

General long-term debt of a government includes

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.

Which of the following is not likely to be a reason why a government might obtain an asset through an operating lease? The government

Governments may enter into operating leases, but may not enter into capital leases.

General obligation debt is the obligation of the government at large and is thereby backed by the government's "full faith and credit" and revenue-raising powers.

In November 2017, the Frost City issued $3 million in 6 percent TANs, payable in April 2018. In what fund or fund type should the city report the TANs on its December 31, 2017 financial statements? Explain, indicating any additional information you would need.

Because they are not obligations of the government at large, revenue bonds are usually not subject to voter approvals or other forms of voter oversight.

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

GASB Statement No 87 requires specifies which of the following

Unlike individuals and businesses, governments cannot seek protection under the Federal Bankruptcy Code.

The work of bond rating agencies is important because

Revenue debt is secured only by designated revenue streams.

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

Auditing Governments and Not-For-Profit Organizations

Federal Government Accounting

Filters

Exam 8: Long-Term Obligations

A major exception to the general rule of expenditure accrual for governmental funds of a state or local government relates to unmatured

Overlapping debt refers to the obligations of property owners within a government's boundaries for their proportionate share of the debt of other governments with overlapping geographic boundaries.

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

Olden City entered into a capital lease agreement as a lessee for several new dump trucks to be used in general government activities. The city maintains its books and records in a manner that facilitates the preparation of the fund financial statements. Which of the following is true?

General long-term debt of a government includes

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.

Which of the following is not likely to be a reason why a government might obtain an asset through an operating lease? The government

Governments may enter into operating leases, but may not enter into capital leases.

General obligation debt is the obligation of the government at large and is thereby backed by the government's "full faith and credit" and revenue-raising powers.

In November 2017, the Frost City issued $3 million in 6 percent TANs, payable in April 2018. In what fund or fund type should the city report the TANs on its December 31, 2017 financial statements? Explain, indicating any additional information you would need.

Because they are not obligations of the government at large, revenue bonds are usually not subject to voter approvals or other forms of voter oversight.

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

GASB Statement No 87 requires specifies which of the following

Unlike individuals and businesses, governments cannot seek protection under the Federal Bankruptcy Code.

The work of bond rating agencies is important because

Revenue debt is secured only by designated revenue streams.

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

Auditing Governments and Not-For-Profit Organizations

Federal Government Accounting

Filters