Exam 6: Accounting for General Long-Term Liabilities and Debt Service

The liability for general obligation bonds should be recorded in the:

Financial statement note disclosures on long-term liabilities should include information on authorization of new debt issues,sale of previously authorized issues,and retirement and refunding of debt during the year.

Compensated absences are leaves of absence for which employees earn the right to be paid,but likely will not be paid due to insufficient government funds.

Which of the following statements regarding debt service funds is ?

Under a bond refunding,the proceeds of a new bond issuance are either deposited in escrow to pay the debt service on the outstanding bonds when due or used to promptly retire previously issued bonds.

The use of long-term debt is a traditional part of the fiscal policy of state and local governments.

All special assessment debt should be reported in the government-wide statement of net position in the Business-type Activities column.

The General Fund of the City of Castle Rock transfers $115,000 to the debt service fund for a $100,000 principal and $15,000 interest payment.The recording of this transaction would include:

Which of the following is not properly recorded in the governmental activities accounts?

On March 2,2016,20-year,6 percent,general obligation serial bonds were issued at the face amount of $3,000,000.Interest of 6 percent per annum is due semiannually on March 1 and September 1.The first payment of $150,000 for redemption of principal is due on March 1,2017.Fiscal year-end occurs on December 31. What is the interest expenditure for the fiscal year ending December 31,2016?

Debt service fund activities are reported as part of governmental activities at the government-wide level.

Since the debt of a government is subject to a legal debt limit,there cannot be any legal overlapping debt.

The purpose of a sinking fund is to set aside resources for a substantial debt payment due at maturity.

When the debt service fund makes a payment of principal and interest on an outstanding long-term debt,the governmental activities accounts:

If a city has an unpaid capital lease obligation at the beginning of its fiscal year,the journal entry in the debt service fund to record the lease payment during that fiscal year will include:

Issuance of tax-supported debt having a maturity of more than one year from date of issue results in a journal entry in only the governmental activities general journal.

Special assessments levied for debt service of bonds issued for a special assessment capital project will be accounted for by a debt service fund under which of the following situations? Government is secondarily Government is not secondarily Obligated for the debt obligated for the debt

The City of New Haven issued $20 million of tax-supported bonds at 102 to finance a new prison.Upon issuance,how will the premium be recorded?

Special assessment debt that carries governmental backing should be reported as "special assessment debt with governmental commitment."

"The entire debt arising from the acquisition of general capital assets under a capital lease agreement should be reported as debt of the fund that accounts for the activities of the department or function using the leased asset.Only debt arising from the lease of equipment used by a number of departments should be reported in the governmental activities accounts,rather than a fund." Do you agree? Why or why not?