ACC 410 QUIZ 5 (4)

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1.

Overlapping debt should be reported in which of the following ways?

2.

A governmental entity that is unable to satisfy claims against it

3.

General long-term debt of a governmental entity includes

4.

A City entered into a long-term capital lease for some office equipment. Assuming the city
maintains its books and records in a manner to facilitate preparation of fund financial
statements, what entry would be made in the General Fund to record this event?

5.

In the government-wide financial statements, the assets acquired under a capital lease would
be reported at

6.

In governmental fund-type financial statements, the assets acquired under a capital lease
would be reported at

7.

Why would a government issue revenue bonds (which generally are issued at a higher rate
of interest than general obligation bonds) even though the government knows that if revenues
from the project are not sufficient to cover principal and interest payments, the government will
use resources from general government activities to fund the principal and interest payments?

8.

To seek protection under the Federal Bankruptcy Code, a governmental entity must

9.

A state created a Housing Authority to provide financing for low-income housing. The
Authority issues bonds and uses the proceeds for that purpose. Currently the Authority has
outstanding $200 million in bonds backed by the States promise to cover debt service
shortages should they arise. The State Constitution specifically limits the State to no more than
$2 million in general obligation debt. How can the state officials defend the $200 million in debt
outstanding?

10.

The City of Pocahontas issued $20 million in general obligation bonds at par. The City
loaned the proceeds to Domsee Fish Processors to expand the size of their facility, which would
allow Domsee to hire additional workers. The loan payments from Domsee to the City are
established to match the principal and interest payments on the bond issue. The bonds are
payable exclusively from the loan repayments by Domsee. The bonds are secured by the
additional plant facilities built by Domsee. Where should the City report the bonds on the
annual financial report?

11.

Which of the following funds is most likely to receive the proceeds of revenue bonds?

12.

New City entered into a lease agreement for several new dump trucks to be used in general
government activities. Assuming the City maintains its books and records in a manner that
facilitates the preparation of the fund financial statements, acquisition of these dump trucks
would require entries in which of the following funds and/or schedules?

13.

The Southside City has $95 million of debt recorded in its Schedule of Changes in LongTerm Obligations, made up of $60 million of general obligation debt, $2 million of compensated
absences payable, $8 million claims and judgments, and $25 million of obligations under capital
leases. The State limits the amount of general obligation debt that can be issued by a City to
20% of the assessed value of taxable property. The assessed value of property in Southside
City is $500 million. The amount of legal debt margin for Southside City is

14.

Debt that is issued by one entity but backed by the promise of another entity to make up any
debt service deficiency is

15.

Pulling County has a December 31 fiscal year-end. In November, the County borrowed $8
million from a local bank, due in six months at 6% interest, to finance general government
operations. The county pledges property tax revenues to secure the loan. At year-end, how
should the bank note be displayed in the fund financial statements?

16.

Cash flows from Operating Activities does NOT include which of the following as cash
outflows?

17.

Which of the following is NOT a rationale/justification for reporting the business-type activities
of a government in a separate fund?

18.

Which of the following is not a proprietary fund?

19.

Which of the following is NOT a valid reason for governmental entities to engage in businesstype activities?

20.

Which of the following is NOT a budget typically prepared for an activity accounted for in a
proprietary fund?

21.

Over the long run, governmental internal service funds are intended to

22.

Which of the following is NOT true about internal service funds as reported in the fund
financial statements?

23.

Lehi City has designated an internal service fund as the single fund to account for its selfinsurance activities. Most of the insured activities such as the police department, fire
department, and general government functions are accounted for in the General Fund. What is
the maximum amount that can be charged to expenditure in the General Fund related to the
self-insurance activities?

24.

The appropriate basis of accounting for the proprietary funds of a governmental entity is

25.

Franklin County operates a solid waste landfill that is accounted for in an enterprise fund.
The County calculated this years portion of the total closure and post closure costs associated
with the landfill to be $300,000. The entry(ies) to record this cost should be

26.

When a governmental enterprise fund has restricted assets on its balance sheet which of the
following is a true statement?

27.

A Statement of Revenues, Expenses, and Changes in Fund Net Assets should include which
of the following in addition to operating revenues and operating expenses and ending Net
Assets?

28.

The City of Brockton voted to establish an internal service fund to account for its printing
services. The City transferred $500,000 cash from the General Fund to the newly created
internal service fund. The appropriate entry in the General Fund to account for this transfer
would be a credit to cash for $500,000 and a debit for $500,000 to

29.
30.

1.

Which of the following are required basic statements of a proprietary fund?

The City of Brockton voted to establish an internal service fund to account for its printing
services. The City transferred $500,000 cash from the General Fund to the newly created
internal service fund. The appropriate entry in the proprietary fund is a debit to cash for
$500,000 and a credit for $500,000 to