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Which of the following statements regarding serial bonds is false?


A) The principal on serial bonds is paid over the term of the bonds.
B) The assets of a debt service fund may include Cash with Fiscal Agent
C) If the first payment is delayed for more than a year with equal payments thereafter, the bonds are deferred serial bonds
D) The principal repayment on an annuity serial bonds decreases each year as the outstanding balance decreases

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The City of Presho had the following transactions related to the construction of a new courthouse. (a)1/2/2015: 20 year 4% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 102. Interest and principle 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)3/1/2015: Land is purchased for a new courthouse at a cost of $ 300,000. (c)3/1/2015: A contract is signed for construction of the new courthouse in the amount of $ 4,300,000. (d)6/15/2015: Cash ($ 225,000)sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. (e)7/1/2015: Interest ($100,000)and principal ($125,000)are paid on the courthouse fund serial bonds. (f)12/1/2015: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $3,700,000. (g)12/27/2015: $97,500 is transferred from the General Fund for the 1/1/2015 interest payment due on the courthouse fund serial bonds.Interest is accrued as of 12/31/2015,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

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Use the following to answer the next six questions: During the fiscal year ended December 31, 2015, the City of Johnstown issued 6% general obligation serial bonds in the amount of $2,000,000 at 102 ($2,040,000) and used $1,980,000 of the proceeds to construct a fire station. The $40,000 premium was transferred to a debt service fund. The $20,000 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, 2015 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2016. -How would the $40,000 premium be accounted for?


A) Amortized to interest expenditure in the debt service fund.
B) As an other financing source in the debt service fund.
C) Both (a) and (b) above.
D) None of the above.

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With respect to Debt Service Funds,which of the following is true?


A) Payments under capital lease obligations may be reported in debt service funds
B) Debt service funds use accrual accounting
C) Each separate long-term obligation must be accounted for in a separate debt service fund
D) All of the above are true

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


A) These funds commonly account for resources provided by long-term debt issues or dedicated taxes.
B) Capital assets appear in both the government-wide and the fund basis financial statements
C) A and B are both correct
D) Neither A or B is correct

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A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2015. Five payments of $9,000 each are to be made, beginning on December 31, 2015. Discounting is at 6%, computed annually. The present value of the five payments is $37,911. -Which of the following would be true as of January 1,2015?


A) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $45,000.
B) An entry would be made debiting Equipment and crediting Capital Leases Payable in a governmental fund, both in the amount of $37,911.
C) An entry would be made debiting Capital Expenditure and crediting Capital Leases Payable in a governmental fund, both in the amount of $37,911.
D) An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $37,911.

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

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Governmental funds,other than the General Fund,are considered major if: I.Total Assets,Liabilities,Revenues,or Expenditures of that individual governmental fund are at least 10% of the corresponding total (assets,liabilities,and so forth) for all governmental funds. II.Total Assets,Liabilities,Revenues,or Expenditures of the individual governmental fund are at least 5% of the corresponding total for all governmental and enterprise funds combined.


A) I only.
B) II only.
C) Either I or II, but need not be both.
D) Both I and II.

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Capital projects funds are always included in the Budgetary Comparison Schedule.

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The principal of permanent funds is classified as Nonspendable Fund Balance.

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The journal entry for the Debt Service fund upon the receipt of money from the General Fund would be:


A) Debit to Cash and a credit to Transfers Payable.
B) Debit to Transfer In and credit to Cash.
C) Debit to Cash and credit to Transfer In.
D) Debit to Cash and credit to Transfer Out.

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Encumbrance accounting is only typically used for


A) Permanent Funds.
B) Debt Service Funds.
C) Capital Projects Funds.
D) None of the above.

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Which of the following is/are true regarding Capital Projects Funds?


A) A major source of funding for capital projects funds is the issuance of long-term debt.
B) Capital project funds only exist for the duration of the project for which it is created.
C) Capital Project funds use the Modified Accrual Basis of Accounting.
D) All of the above are true.

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What is the difference between a current refunding and advance refunding?

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Current refunding exists when new debt i...

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Capital outlay expenditures of capital projects funds will typically result in additions to the general fixed assets reported in the governmental fund Balance Sheet.

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Which of the following statements is false?


A) The corpus (principal) from a permanent fund should be classified as Nonspendable.
B) Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Assigned Fund Balance
C) The residual classification for funds other than the General Fund is Assigned.
D) If a bond sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted.

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Which of the following statements is false?


A) Resources representing supplies and prepaid items are classified in governmental funds as Nonspendable Fund balance.
B) Capital Projects, debt service and permanent funds do not typically record budgets.
C) Debt service and permanent funds do not record encumbrances.
D) Principal of permanent funds is classified as Committed Fund Balance

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If a government has debt service due no more than one month after the end of a fiscal year and has the resources available,then it is permitted to accrue expenditures and a fund liability for the debt service.

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


A) Typically, resources are provided through transfers from the General or other funds.
B) Encumbrances are recorded to reflect principal payments that are expected to come due within the current accounting period.
C) There are two types of debt service expenditures: interest and principal
D) In most cases, interest and principal payments are not recorded until payment is due.

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Budgets are typically not recorded for Special Revenue Funds.

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