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

Pollution remediation obligations arise from responsibilities related to the cleanup of hazardous wastes or hazardous substances resulting from existing pollution.

When bonds are sold at a premium for a capital project,the premium amount generally:

Notes to the financial statements of a state or local government should include a schedule,or summary,of debt service requirements (principal and interest payments)of debt outstanding on the balance sheet date.

Which of the following statements is ?

In the current fiscal year,St.George County issued $3,000,000 in general obligation term bonds for 102.The county is required to use any accrued interest or premiums for servicing the debt issue. a.How would the bond issue be recorded at the fund and government-wide levels?

Which of the following statements is always concerning the reporting of debt service funds?

Debt limit is a term used to denote the total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any one time.

Governments should report an estimated loss from a claim or judgment as an expense and as a liability in the government-wide financial statements if a claim appears reasonable.

Resources to pay interest on tax-supported bond issues are generally accumulated in special revenue funds.

Debt service funds for term bonds would generally include sinking fund investments.

Although some governments have issued taxable debt,the interest earned on most debt issued by state and local governments is exempt from federal taxation and,in some states,from state taxation.

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 expense for the fiscal year ending December 31,2016?

The sale of revenue bonds by a water utility fund would be recorded:

If a government has deposited or transferred financial resources dedicated for payment of debt service to the debt service fund and payment of principal and interest is due early in the following year,then the expenditure and related liability may be recognized in the debt service fund prior to year end.

Which of the following basic financial statements contains a column for the total of all debt service funds?

Explain the financial reporting for special assessment bonds when a government assumes responsibility for debt service should special assessment collections be insufficient,and when the government assumes no responsibility whatsoever.

Compensated absences may be reported in governmental funds.

Which of the following debt service funds would normally have the largest balance in its Fund Balance account?

How are general long-term liabilities distinguished from other long-term liabilities of the government? How does the financial reporting of general long-term liabilities differ from the financial reporting of other long-term liabilities?

Long-term debt intended to be repaid from tax levies or special assessments is recorded in debt service funds.