ACC 410 QUIZ 5

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1.

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?

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Which of the following funds is most likely to receive the proceeds of revenue bonds?
Overlapping debt should be reported in which of the following ways?
In governmental fund-type financial statements, the assets acquired under a capital lease
would be reported at
General long-term debt of a governmental entity includes
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?
Debt that is issued by one entity but backed by the promise of another entity to make up any
debt service deficiency is
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?
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?
Obligations of property owners within a particular government for their proportionate share of
debts of other governments with whom they share boundaries is
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
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?

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To seek protection under the Federal Bankruptcy Code, a governmental entity must
A governmental entity that is unable to satisfy claims against it
An obligation issued in the name of a government on behalf of a nongovernmental entity is
called
Over the long run, governmental internal service funds are intended to
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 Self-Insurance Fund can recognize as
revenue is
Which of the following is NOT a valid reason for governmental entities to engage in businesstype activities?
Any internal service fund balances that are not eliminated in the consolidation process
should generally be presented on the government-wide financial statements
When a governmental enterprise fund has restricted assets on its balance sheet which of the
following is a true statement?
The appropriate basis of accounting for the proprietary funds of a governmental entity is
Which of the following is NOT a rationale/justification for reporting the business-type activities
of a government in a separate fund?
Marsh Lake County operates a solid waste landfill that is accounted for in a governmental
fund. The County calculated this years portion of the total closure and post closure costs
associated with the landfill to be $600,000. The entry to record this cost should be
Cash flows from Operating Activities does NOT include which of the following as cash
inflows?
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
In which of the following circumstances must an enterprise fund be used to account for the
activity?
Which of the following are required basic statements of a proprietary fund?
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?
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
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