·         Question 1

3 out of 3 points    

The repayment of bond principal should be reported in the fund statements of a debt service fund as a/an    





·         Question 2

3 out of 3 points    

Calhoun County makes annual transfers from the general fund to the debt service fund to pay principal and interest on long-term debt. In the debt service fund, what is the appropriate entry when the principal payment is made?    





·         Question 3

3 out of 3 points    

A government has elected to issue new debt and use the proceeds to redeem existing debt because there is an economic gain in doing so.  There is, however, an “accounting loss” associated with these events.  The accounting loss is defined as    





·         Question 4

3 out of 3 points    

Six years ago Hill City issued $10 million of 6 percent term bonds, due 30 years from the date of issue.  Interest on the bonds is payable semi-annually on January 1 and July 1.  Hill City has a September 30 fiscal year-end.  The amount of interest payable that should be included on the balance sheet for the debt service fund of Hill City at September 30 is    





·         Question 5

3 out of 3 points    

In early 2014, Jackson City issued $10 million of 6 percent term bonds to finance a highway construction project.  Because of problems related to the Endangered Species Act, the city deferred highway construction that year.  In early 2015, the city entered into contracts for construction that will begin in summer 2015 and be completed by summer 2016.  When the city realized they would not need the bond proceeds in 2015, they invested the proceeds in risk-free federal government securities bought to yield 7 percent.  What potential arbitrage liability, if any, should the city recognize as a result of the year 2015 transactions?    





·         Question 6

3 out of 3 points    

The capital projects fund of a government is accounted for using which of the following bases of accounting?    





·         Question 7

3 out of 3 points    

Under existing federal statutes, arbitrage, as it applies to state and local governments is    





·         Question 8

3 out of 3 points    

Previously Atomic City had issued bonds with a face value of $10 million to construct a new city hall.  Because the money will not be needed for several months, the city invested the bond proceeds in U.S. Government securities.  Assume that the city maintains its books and records in a manner that facilitates the preparation of fund financial statements.  What is the appropriate entry when the city receives interest on the investments?    





·         Question 9

3 out of 3 points    

Salvador County issued $25 million of 5 percent demand bonds for construction of a county maintenance building.  Before year-end the county entered into a two-year noncancellable take-out agreement with a local bank with a 10-year payback period.  The county estimates that 20 percent of the bonds would be demanded (called) by the buyers if interest rates increased by at least One percentage point. At year-end, rates on comparable debt were 7 percent.  How should these demand bonds be reported in the county’s government-wide financial statements at year-end?    





·         Question 10

3 out of 3 points    

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





·         Question 11

0 out of 3 points    

Dumas 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 percent interest, to finance general government operations.  The county pledges property tax revenues to secure the loan.  At year-end, how should the county display the bank note in the governmental fund financial statements?    





·         Question 12

3 out of 3 points    

General long-term debt of a government includes    





·         Question 13

3 out of 3 points    

Voters of Valdez School District, a public school district, approved construction of a new high school at a cost not to exceed $20 million.  The district will finance the construction by issuing $20 million of 6 percent term bonds payable in 20 years.  Because the site had already been prepared, the school district began construction immediately but the bonds would not be issued for nearly a year.  Shortly before the fiscal year-end, the school district borrowed $5 million from a local bank due in one year with interest at 6.2 percent.  The note will be repaid from bond proceeds.  The school district secured a financing agreement with the bank to convert the debt to a 10-year debt if the school district is unable to sell the bonds by the due date.  At year-end, how should the $5 million note be displayed in the governmental fund financial statements?    





·         Question 14

3 out of 3 points    

A government that is unable to satisfy claims against it    





·         Question 15

3 out of 3 points    

When the proceeds of long term debt are reported in governmental fund financial statements    







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