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ACC 410 Quiz 5



ACC 410 Quiz 5 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? 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 Long-Term 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? 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 City’s 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 business-type activities? Any internal service fund balances that are not eliminated in the consolidation process should generally be


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