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Issuance of tax-supported debt having a maturity of more than one year from date of issue results in a journal entry in only the governmental activities general journal.

A) True
B) False

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Since the debt of a government is subject to a legal debt limit,there cannot be any legal overlapping debt.

A) True
B) False

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When bonds are sold at a premium for a capital project,the premium amount generally


A) Increases the cash available to the capital projects fund.
B) Is transferred to the debt service fund.
C) Is transferred to the General Fund.
D) Is ignored by both the capital projects fund and any other fund.

E) A) and B)
F) A) and C)

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The liability for special assessment bonds that carry a secondary pledge of a city's general credit,if reported in conformity with GAAP,should be reported in the balance sheet(s) of


A) A debt service fund.
B) An agency fund.
C) The governmental activities accounts.
D) An agency fund and disclosed in the notes to the financial statements.

E) A) and B)
F) A) and C)

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Explain the essential differences between regular serial bonds and term bonds and how debt service fund accounting differs for the two types of bonds.

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Regular serial bonds and term bonds are ...

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Which of the following is not properly recorded in the governmental activities accounts?


A) Tax-supported general obligation bonds.
B) Obligations under capital leases used to finance general capital assets.
C) The long-term portion of judgments and claims.
D) Revenue bonds issued by an enterprise fund.

E) A) and B)
F) None of the above

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In the current fiscal year,Casper County issued $10,000,000 in general obligation term bonds at 102 for construction of a new county complex.The county is required to use any accrued interest or premiums for servicing the debt issue. a.Prepare journal entries to record the bond issuance at the fund and government-wide levels? b.How would the bond issue be reported in the fund financial statements and the government-wide financial statements? c.What effect,if any,do interest payments have on the carrying value of the bond issue as reported in the financial statements?

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a. Journal entries to record the bond is...

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Special assessment debt is not recorded in a government's accounts.

A) True
B) False

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False

Premiums received on tax-supported bonds are generally transferred to what fund?


A) Capital projects.
B) Debt service.
C) General.
D) Special revenue.

E) None of the above
F) All of the above

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Both general capital assets acquired or constructed from the proceeds of special assessment debt and the related long-term liability are recorded in the governmental fund.

A) True
B) False

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False

If a debt service fund is used,capital lease payments for general capital assets should be recorded by a debt service fund rather than the fund using the leased asset.

A) True
B) False

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Which of the following basic financial statements contains a column for the total of all debt service funds?


A) Statement of cash flows.
B) Statement of revenues,expenditures,and changes in governmental fund balances.
C) Statement of revenues,expenses,and changes in proprietary net position.
D) No basic financial statement contains a column for the total of all debt service funds.

E) All of the above
F) A) and B)

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Which of the following statements is always true concerning the reporting of debt service funds?


A) Debt service funds are reported in a separate column in the governmental fund financial statements.
B) Debt service funds are reported in a separate column in the government-wide financial statements.
C) Debt service funds are reported in the Other Governmental Funds column in the governmental fund financial statements.
D) Debt service funds are reported in the Governmental Activities column in the government-wide financial statements.

E) All of the above
F) A) and B)

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D

The following key terms from Chapter 6 relate to accounting for general long-term liabilities and debt service: A.Legal defeasance B.Regular serial bonds C.In-substance defeasance D.Irregular serial bonds E.Debt limit F.Annuity serial bonds G.Debt margin The following key terms from Chapter 6 relate to accounting for general long-term liabilities and debt service: A.Legal defeasance B.Regular serial bonds C.In-substance defeasance D.Irregular serial bonds E.Debt limit F.Annuity serial bonds G.Debt margin For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition. For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.

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1.C,2.F,3.B,4.E,5.A
Explanation: For eac...

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A debt service fund is a


A) Nonexpendable fund.
B) Governmental fund.
C) Fiduciary fund.
D) Proprietary fund.

E) A) and B)
F) A) and C)

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Notes to the financial statements of a state or local government should include a schedule,or summary,of debt service requirements (principal and interest payments)until the final maturity of debt outstanding on the balance sheet date.

A) True
B) False

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While governmental fund liabilities and expenditures for debt service on general long-term debt are generally recognized in the reporting period that debt payments are due to correspond with appropriations,if a government has deposited or transferred financial resources dedicated for payment of debt service to the debt service fund and payment of principal and interest is due early in the following year,then the expenditure and related liability may be recognized in the debt service fund prior to year end.

A) True
B) False

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"Bonds to be retired by a debt service fund are recorded in that fund throughout their life." Do you agree or disagree? Why or why not?

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Disagree.Debt service funds account for ...

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Which of the following statements is not true for debt service funds?


A) Special assessment debt for which the government has some obligation is paid through the debt service fund.
B) Interest payable is reported as a liability of the debt service fund.
C) Bond principal is shown as a liability of the debt service fund only when that principal is due and payable.
D) All tax-supported bond principal is shown as a liability of the debt service fund.

E) C) and D)
F) None of the above

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Which of the following is a true statement regarding in-substance defeasance of bonds?


A) The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.
B) The government must agree to maintain sufficient cash and investment balances in its debt service fund to cover all interest and principal payments for the debt being defeased.
C) The government must pledge to transfer amounts to an escrow agent prior to the due date for each interest and principal payment for the debt being defeased.
D) The government must agree to maintain sufficient unrestricted cash and investments in its governmental funds to cover all interest and principal payments for the debt being defeased.

E) A) and C)
F) None of the above

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