ACC 410 Final Exam Part 1
This final exam consist of 25 multiple choice questions and covers the material in Chapters 6 through 10.
Harbor City issued 6% tax-exempt bonds and used the proceeds to acquire federal government securities yielding 7%. After paying the interest on the tax-exempt bonds, the City cleared 1%. This is an example of
A governmental entity 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. An accounting loss is defined as
Use of a Debt Service Fund is required
With regard to the resources dedicated to the acquisition of fixed assets which will be used in general government activities, which of the following is true?
Sugar City issued $2 million of bonds to fund the construction of a new city office building. The bonds have a stated rate of interest of 5% and were sold at 101. Which of the following entries should be made in the Capital Project Fund to record this event?
Investments, other than bank balances, must be classified into one of three categories. Which of the following is NOT one of those categories?
For a government that elects NOT to capitalize its works of art and similar assets, the appropriate entry when receiving a contribution of a work of art at the government-wide level is
If a government receives a donation of a work of art, the government must recognize revenue
Which of the following is NOT an example of a derivative?
Donated assets are reported at
Southwest City enters into a lease agreement that contains a nonappropriation clause. The clause
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
Debt that is issued by one entity but backed by the promise of another entity to make up any debt service deficiency is
A state created a Housing Authority to provide financing for low-income housing. The Authority issues bonds and uses the proceeds for that purpose. Currently the Authority has outstanding $200 million in bonds backed by the State’s promise to cover debt service shortages should they arise. The State Constitution specifically limits the State to no more than $2 million in general obligation debt. How can the state officials defend the $200 million in debt outstanding?
Which of the following funds is most likely to receive the proceeds of revenue bonds?
The City issued $2 million in general obligation bonds to acquire a fleet of vehicles for the Central Motor Pool Internal Service Fund At the date of issue, the appropriate entry in the proprietary fund is a $ 2 million debit to cash and a $2 million credit to
A proprietary fund of a governmental entity has donor-restricted assets on its balance sheet. Which of the following best describes where and how those assets will generally be displayed?
Marsh Lake County operates a solid waste landfill that is accounted for in a governmental fund. The County calculated this year’s 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
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
Which of the following is NOT a valid reason for governmental entities to engage in business-type activities?
At the beginning of the year, the permanent fund of Rapid City had an investment portfolio with a historical cost of $200,000 and a fair value of $220,000. There were no purchases or sales of securities during the year. At year end the portfolio had a fair value of $240,000. At the end of the year Rapid City will account for this increase in fair value in which of the following ways?
Cedar City has a permanent fund that reported current year investment earnings (realized and unrealized) of $80,000. The endowment principal is $800,000 and the city council has adopted a policy of considering only the inflation adjusted rate of return to be available for transfer to the recipient fund. During the current year the Council declared the inflation-adjusted rate of return to be 8%. How much revenue would be recognized in the permanent fund?
Hill City Light & Water (a proprietary fund) contributes to a defined benefit plan for its employees. During 1999 Hill City contributed $27 million to its pension plan. On February 15, 2000, Hill City made an additional $3 million contribution related to 1999. The actuarially determined contribution amount was $32 million. The amount of pension expense recognized by Hill City Light & Water for 1999 should be:
Permanent funds are classified as
A defined contribution pension plan is one in which the employer agrees to which of the following?