ACC 410 QUIZ 5 (1)

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1.

Industrial development bonds are issued in the name of a government with the proceeds
used to attract private businesses to a community. Which of the following is a true statement
about industrial development bonds?

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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?
Obligations of property owners within a particular government for their proportionate share of
debts of other governments with whom they share boundaries is
Which of the following funds is most likely to receive the proceeds of revenue bonds?
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?
In governmental fund-type financial statements, the assets acquired under a capital lease
would be reported at
Governmental entities enter into capital leases, rather than conventional buy and borrow
arrangements for which of the following reasons? Capital leases
Southwest City enters into a lease agreement that contains a nonappropriation clause. The
clause
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?
Sun City is located in Hailey County. Sun Valley School District encompasses all of Sun City
and some of Hailey County. Property in Sun City is assessed at $400 million; property in Hailey
County is assessed at $800 million; property in Sun Valley School District is assessed at $600
million. The total debt outstanding for Sun City is $30 million; Hailey County is $50 million; Sun
Valley School District is $45 million. Compute the amount of direct and overlapping debt for
Sun City.
Overlapping debt should be reported in which of the following ways?
A governmental entity that is unable to satisfy claims against it
In the government-wide financial statements, the assets acquired under a capital lease would
be reported at

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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?
An obligation issued in the name of a government on behalf of a nongovernmental entity is
called
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?
Which of the following is NOT a valid reason for governmental entities to engage in businesstype activities?
The appropriate measurement focus for the business-type activities of the City of Rockford is
Cash flows from Operating Activities does NOT include which of the following as cash
outflows?
Which of the following is NOT true about internal service funds as reported in the fund
financial statements?
Which of the following is NOT a budget typically prepared for an activity accounted for in a
proprietary fund?
Washington County has designated the general fund as the single fund to account for its selfinsurance activities. What is the maximum amount that can be charged to expenditure in the
general fund related to the self-insurance activities?
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
The City issued $2 million in general obligation bonds to acquire a fleet of vehicles for the
Central Motor Pool Internal Service Fund At the date of issue, the appropriate entry in the
proprietary fund is a $ 2 million debit to cash and a $2 million credit to
In the Statement of Net Assets, the net assets of a proprietary fund should be displayed in
which of the following categories?
During the year the Citys Self-Insurance Internal Service Fund billed the General Fund
$300,000 for premiums, of which $30,000 was for catastrophic losses and the balance was the
premium computed on an actuarially-determined basis. During the year the City incurred
$250,000 in claims losses. The total amount transferred to the Self-Insurance Fund by the
General Fund was $310,000.The amount the City General Fund can recognize as expenditure
is
Cash flows from Operating Activities does NOT include which of the following as cash
inflows?
Any internal service fund balances that are not eliminated in the consolidation process
should generally be presented on the government-wide financial statements
A proprietary fund of a governmental entity has donor-restricted assets on its balance sheet.
Which of the following best describes where and how those assets will generally be displayed?
The appropriate basis of accounting for the proprietary funds of a governmental entity is