ACC.2020 Ch.5
The City of Valley Ridge purchased bonds of XYZ Company for $250,000. On the balance sheet date, the bonds had a fair value of $255,000. The bonds should be reported at ______.
$255,000
Match the items with the fund classifications where they would likely be classified in a Capital Projects Fund. 1. Restricted- 2. Committed- 3. Assigned- 4. Unassigned-
1. Intergovernmental grants dedicated to capital improvements. 2. Resources for long-term construction contracts. 3. Any remaining unassigned net resources. 4.No items would be in this category.
Match the type of serial bond with the payment terms. Regular Deferred Annuity irregular
1. The total principal of an issue is repayable in a specified number of equal installments. Installments are paid on a regular basis with the first installment due more than one year after bond issue. 3. Annual debt payments remain relatively uniform as the interest payments decrease and the principal payments increase. 4.Any pattern of repayment that does not fit into one of the other categories may be used.
Which of the following are NOT considered revenues for a debt service fund? 1.Undesignated taxes levied by the General Fund and transferred to the debt services fund. 2.Taxes and special assessments levied for principal and interest on long-term debt. 3.Unexpended capital project resources. 4. Bond premiums on capital project bonds.
1. Undesignated taxes levied by the General Fund and transferred to the debt services fund. 3.Unexpended capital project resources. 4.Bond premiums on capital project bonds.
Types of serial bonds include ______. 1. deferred 2. annuity 3. irregular 4. term 5. regular
1. deferred 2. annuity 3. irregular 5. regular
Capital project funds ______. 1. continue to exist indefinitely once they are established 2. are often established for each individual project 3. often receive funding from issuing long-term debt 4. may account for multiple projects in some jurisdictions
2.are often established for each individual project 3.often receive funding from issuing long-term debt 4.may account for multiple projects in some jurisdictions
Which of the following items are NOT accounted for as revenue in a capital projects fund? 1.Grants received from another governmental unit 2.Taxes raised specifically for the fund 3. Bond proceeds 4..Revenue raised by the general fund and transferred in 5. Long-term debt proceeds
3.Bond proceeds 4.Revenue raised by the general fund and transferred in 5.Long-term debt proceeds
Which of the following items are accounted for as revenue in a capital projects fund? 1.Bond proceeds 2.Revenue raised by the general fund and transferred in 3.Long-term debt proceeds 4.Grants received from another governmental unit 5.Taxes raised specifically for the fund
4. Grants received from another governmental unit 5. Taxes raised specifically for the fund
Required financial statements for the General Fund and other government funds per GASB Statement 34 are the ______.
Balance Sheet Statement of Revenues, Expenditures and Changes in Fund Balance
'' While resources may be received from grants, transfers, and gifts, a major source of funding for __________ __________ funds is the issuance of long-term debt.
Capital Project
GASB requires that resources intended to fulfill contractual obligations be reported as __________ in the fund balance of a Capital Projects Fund
Committed
True or false: Debt service funds are usually created for debt issues where the activities of proprietary funds are intended to generate sufficient cash to make interest and principal payments.
False
True or false: If debt service funds are not required by statute, the decision of whether or not to use them rests with the government.
False Reason: Bond indentures or other agreements with creditors may require the use of a debt service fund, even it not required by statute.
The principal of a permanent fund is classified as __________ Fund Balance
Nonspendable or nonexpendable
If a sinking fund is required by creditors or law, unexpended resources would be classified as ________ in the fund balance of the debt service fund.
Restricted
Unexpended resources other than the corpus are classified as __________ or _________ Fund Balance in the permanent fund.
Restricted or Assigned
Unexpended resources transferred to the debt service from from the General Fund are typically classified as _________ or _________ Fund Balance.
Restricted or Assigned
The City of Valley Ridge purchased bonds of XYZ Company for $250,000. On the balance sheet date, the bonds had a fair value of $255,000. Which of the following statement is correct?
Revenue of $5,000 should be recorded to reflect the increase in fair value.
It may be desirable to fund _________ bonds throughout their life to produce level annual payments to the _________ ________ fund.
Term Debt service
Which of the following statements is correct? 1.Neither transfers within a city's own government nor intergovernmental grants increase overall resources. 2. Transfers within a city's own government do not increase overall resources, but intergovernmental grants do. 3.Transfers within a city's own government increase overall resources, but intergovernmental grants do not. 4.Both transfers within a city's own government and intergovernmental grants increase overall resources.
Transfers within a city's own government do not increase overall resources, but intergovernmental grants do.
Only the General Fund has a(n) _______ Fund Balance.
Unassigned
The City of Valley Ridge Capital Projects fund expects to receive funding this year from within the Valley Ridge government and additional funding from the federal government. How will these funds be recorded?
Valley Ridge government receipts are recorded as other financing sources and federal government receipts are recorded as revenue.
When new debt is issued and the proceeds are placed in an escrow account pending the call date or maturity date of the existing debt, a(n) ______ _________ occurs
advance refunding
If bonds are sold between interest dates, the government ______.
collects the amount of interest from the purchaser that has accrued to the date of sale
When new debt is issued and the proceeds are used to call the existing debt, a(n) ______ occurs.
current refunding
When new debt is issued and the proceeds are used to call the existing debt, a(n) ________ _________ occurs.
current refunding
Taxpayers of the City of Valley Ridge and the Valley City Council have approved a $950,000 bond issue. The bonds should be recorded in the Capital Projects fund when the ______.
debt is actually incurred
Accounting for the financial resources intended to provide payment of principal and interest as they come due is done in a(n) ________ ___________ fund.
debt service
Because the amounts of bond issues and associated capital project resources are often approved by voters, bond premiums and unexpended capital project resources are generally required to be transferred to ________ _______ funds
debt service
When bonds are sold between interest dates, cash in the amount of accrued interest at the time of the bond issuance should be recorded in the ______ fund.
debt service
When a government issues deferred serial bonds, ______. 1. interest receivable on investments should not be accrued in the debt service fund at year-end 2. debt service fund cash should be invested 3. the accounting is less complex than accounting for regular serial bonds 4. it is fiscally prudent to accumulate funds for payment when the bonds mature
debt service fund cash should be invested it is fiscally prudent to accumulate funds for payment when the bonds mature
The City of Valley Ridge issued bonds at a discount. If a transfer is not received from another fund, the discount will ______ the total resources available for the project.
decrease
When old debt is not reported in the financial statements and is replaced by new, refunding debt the debt is said to be ________ for accounting purposes
defeased
A government will normally have several years without principal repayment when it issues ________ __________ bonds.
deferred serial
When preparing financial statements for governmental funds, ______.
each major fund is reported in a separate column a single column is reported for all nonmajor funds
When a trust does not distinguish between earnings and principal so that both may be used for the purpose provided, the trust is said to be ___________.
expendable
Bond issue costs are generally recorded as ______.
expenditures
Proceeds of debt issues should be recognized by a capital projects fund at the time the debt is ______.
incurred
Accounting for debt service in a debt service fund ______.
may be required by creditor agreements
If principal and/or interest dates occur at times other than the end of the fiscal year, accruals are ______ government-wide financial statements.
not made in the debt service fund financial statements but are made when preparing the
If principal and/or interest dates occur at times other than the end of the fiscal year, accruals are ______.
only made when preparing the government-wide financial statements
When bonds are sold at a(n)_________ it is transfered to the debt service fund as an Other Financing Sources.
premium
In a debt-service fund, interest on long-term debt is generally ______.
recognized as an expenditure in the year it is legally due
Cash received as permanent endowments from private citizens that may never be spent, instead being used to earn money to benefit the government or its citizens, is recorded as ______.
revenue
The City of Valley Ridge received $200,000 from a private citizen with the stipulation that the money never be expended and the earnings from the investment of the funds be used to benefit the City's Theater Arts Program for Children. The receipt of the $200,000 cash is recorded as ______.
revenue
The appropriate fund for an expendable trust that is used to benefit the government of its citizenry is ______.
special revenue
Unlike serial bonds, ______ bond issues mature in their entirety on a given date.
term
Bond premiums are recorded in the capital projects fund and ______.
transferred to the debt service fund as other financing sources
GASB Statement 34 requires ______ financial statements for the General Fund and other governmental funds.
two
Any premium on bond issues generally must be ______.
used for debt service
City of Valley Ridge bonds pay $18,000 of interest on March 1 and Sept 1 of each year. The city's year ends on December 31. The liability that should be reported on the December 31 balance sheet for this debt is $ _____________.
zero 0