Exam 5: Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

The residual classification for governmental funds other than the General Fund is Assigned.

Which of the following statements is false?

A gift of $1,000,000 to a city,to be invested permanently,with the proceeds to be used to maintain the city war memorials should be accounted for in a special projects fund.

Capital assets are not reported in governmental funds.

The City of St.Michael received a gift of $800,000 from a local resident on April 1,2014 and signed an agreement that the funds would be invested permanently and that the income would be used to maintain the city cemetery.The following transactions took place during the year ended December 31,2014. (a)The gift was recorded on April 1. (b)On April 1,2014,XYZ Company bonds were purchased in the amount of $750,000,at par.The bonds carry an annual interest rate of 5 percent,payable semiannually on October 1 and April 1. (c)On October 1,the semiannual interest was received. (d)From October 1 through December 1,payments were made totaling $17,200 to a lawn service. (e)On December 31,an accrual was made for interest. (f)Also,on December 31,a reading of the financial press indicated that XYZ bonds had a fair value of $745,500,exclusive of accrued interest. (g)The books were closed. Required: A.Record the transactions on the books of the Cemetery Perpetual Care Fund. B.Prepare a separate Statement of Revenues,Expenditures,and Changes in Fund Balances for the Cemetery Perpetual Care Fund for the Year Ended December 31,2014. C.Prepare the Balance Sheet for the Cemetery Perpetual Care Fund for the year ended December 31,2014

Use the following to answer the next six questions: During the fiscal year ended December 31, 2014, the City of Johnstown issued 6% general obligation serial bonds in the amount of $3,000,000 at 102 ($3,060,000) and used $2,970,000 of the proceeds to construct a fire station. The $60,000 premium was transferred to a debt service fund. The $30,000 left in the capital projects fund at the end of the project was later transferred to the debt service fund. The bonds were dated April 1, 2014 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2015. -How would the $60,000 premium be accounted for?

Which of the following would be accounted for as a permanent fund?

An annuity serial bond is one where the amount of the principal increases each year by the same amount that the interest payments decrease.

Proceeds of tax supported bonds are recognized in a capital projects fund as a(an):

With respect to Debt Service Funds,which of the following is not correct?

Permanent funds account for resources that are donor restricted to the extent earnings (but not principal)may be used to support government programs.

Which of the following is a common source of funding for capital projects?

Use the following to answer the next four questions: On April 1, 2014, the City of Southern Ponds issued $4,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,990,000 was used to construct the police station, which was completed before December 31, 2014, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2014, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2015. -How would the $3,990,000 be accounted for?

Use the following to answer the next five questions: On October 1, 2013, the City of Mizner issued $3,500,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,475,000 was used to construct the addition, which was completed prior to June 30, 2014. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2013, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $175,000 is due October 1, 2014. The fiscal year for Mizner is July 1- June 30. -What amount would be reported as debt service expenditures in the year ended June 30,2014?

Special assessments may be levied to finance construction projects or to provide current services.

General fixed assets that are acquired with governmental fund resources are reported as assets in the:

When a governmental unit is primarily or secondarily liable for the debt,debt proceeds for special assessment obligations levied for the construction phase of a capital improvement project should be reported in which of the following fund types?

When a purchase order is issued under a Capital Projects fund,how should the transaction be recorded?

Capital projects funds are not normally included in the Budgetary Comparison Schedule.

When a capital project has been constructed entirely with bond proceeds and funds are left over at the end of the project,which of the following would normally take place?