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

A special assessment tax is a tax levy that is assessed against only those taxpayers who are deemed to benefit from the service or project paid for by the proceeds of the special assessment levy.

Which of the following projects would normally be accounted for in a capital projects fund?

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. -What would be the amount of expenditures recorded by the debt service fund for the fiscal year ended December 31,2015?

Budgets are typically recorded for Special Revenue Funds.

The City of Dundee received a gift of $705,000 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 $700,000,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 $16,600 to a lawn service company. (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 $ 703,500,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.

The principal of permanent funds must be classified as Nonspendable Fund Balance.

With respect to Capital Projects Funds,which of the following is correct?

Budgets are typically not recorded for Debt Service Funds.

The City of Little River had the following transactions related to the construction of a new courthouse. (a)1/2/2014: 20 year 6% General Obligation Serial Bonds with a face value of $3,000,000 are issued at 101.Interest payments are made on Jan.1 and July 1 of each year.The premium was transferred into the Debt Service Fund.The General Fund will fully fund each payment as they become due. (b)3/1/2014: Land is purchased for a new park at a cost of $ 175,000. (c)3/1/2014: A contract is signed for landscaping and construction of various structures in the park in the amount of $ 2,600,000. (d)6/15/2014: $165,000 is transferred from the General Fund for the 7/1 payment due on the courthouse fund serial bonds. (e)7/1/2014: Interest ($90,000)and principal ($75,000)are paid on the courthouse fund serial bonds. (f)12/1/2014: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $1,716,000. (g)12/27/2014: $87,750 is transferred from the General Fund for the 1/1/10 interest payment due on the courthouse fund serial bonds.Interest is accrued as of 12/31/2014,following the exception permitted by GASB. Required: Prepare a Statement of Revenues,Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds.Assume this is the first year for each fund (beginning fund balances are zero)and the City has no other long-term debt than that described above.Use separate columns for the two funds

Premiums generated from the issuance of bonds for a capital projects fund are generally transferred to the General Fund.

Which of the following is not correct regarding Government Trust Accounting?

Which of the following funds typically record budgets?

When using debt service accounting,interest on long term debt is not to be accrued unless the payment is due in no more than one month and the government has resources available for payment.

Which of the following is not true regarding permanent funds?

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Committed Fund Balance

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Restricted Fund Balance

Which of the following should be accounted for in a permanent fund?

Under governmental accounting principles for capital and operating leases; expenditures are recorded each period for the amount of the annual lease payment for all leases,but the expenditures are classified differently for capital and operating leases.

When a payment is due to a contractor from capital projects fund resources,the debit would be to:

When a government receives a gift that must be invested permanently and the investment proceeds are used to benefit the government or its citizens,it would be appropriate to account for that gift in a private purpose trust fund.