Governmental accounting exam 2
questions with actual answers.
Ina Capital Projects Funds proceeds of borrowing are listed as _____________, amount from the
General Fund or a Special Revenue Fund are reported as ____________ and the amounts taxes raised
specifically for a Capital Projects Fund are reported as __________. ANS -Proceeds of Bonds (or
Proceeds of Long-term Notes);
Transfers In;
Revenues of the special projects fund
The expenditures for a Capital Projects Fund are generally characterized as __________. ANS -
Expenditures - Capital Outlay
Generally, when bonds to be used for a capital project are sold at a premium, what happens to the
premium? ANS -It is transferred to the Debt Service Fund that will account for paying off the Bonds
Generally, when bonds to be used for a capital project are sold at a discount, what happens? ANS -
Either less money will be available for use on the project or the difference will be transferred by another
fund
How are bond issue costs for a Capital Projects Fund usually handled? ANS -They are generally an
expenditure of the Capital Projects Fund
What fund is used to account for accrued interest when bonds for a capital project are sold between
interest dates? ANS -Debt Service Fund
Retention of a contractually stipulated percentage to a contractor is common until ____________. ANS
-The construction is completed and has been inspected for conformity with specifications and plans
The assets, liabilities, and fund balances of a major capital project continuing from one year to another
would appear in the ____________, with any fund balance commonly being shown in the category
labeled ____________. ANS -Governmental fund Balance Sheet;
Restricted
, If a non-cancel label lease meets any of the following criteria, it is a capital lease: ANS -- the lease
transfers ownership of the property to the lessee by the end of the lease term.
- the lease contains an option to purchase the property at a bargain price.
- the lease term is equal to or greater than 75% of the estimated economic life of the asset.
- the present value of rental or other minimum lease payments equals or exceeds 90% of the fair market
value of the asset.
If a government acquires general fixed assets under a capital lease agreement, the asset should be
recorded in the government-wide financial statements at the beginning of the agreement at the lesser
of: ANS -(1) the present value of the rental and other minimum lease payments, or
(2) the fair value of the leased property
A special assessment is a tax levy that __________, and may be either _________ types or __________.
ANS -Is assessed only against certain tax payers;
Service;
Construction types
Special assessments may be accounted for in one of two ways. It will be in a special projects fund if
_____________, or an agency fund if _____________. ANS -The government is primarily or secondarily
liable for the debt;
The government is not responsible
The Debt Service Fund is used to ___________. ANS -Account for financial resources that are intended
to provide payments of interest and principal on long-term debt
One peculiarity of the modified accrual basis of accounting as applied to debt service accounting is that
_____________. ANS -Interest on long-term debt is not accrued. It is an expenditure of the period in
which the interest becomes due
When governments use a fiscal agent to distribute interest and principal payments to bond holders, the
government first records its payment to the agent as ___________, then records __________. ANS -
Cash with Fiscal Agent;
questions with actual answers.
Ina Capital Projects Funds proceeds of borrowing are listed as _____________, amount from the
General Fund or a Special Revenue Fund are reported as ____________ and the amounts taxes raised
specifically for a Capital Projects Fund are reported as __________. ANS -Proceeds of Bonds (or
Proceeds of Long-term Notes);
Transfers In;
Revenues of the special projects fund
The expenditures for a Capital Projects Fund are generally characterized as __________. ANS -
Expenditures - Capital Outlay
Generally, when bonds to be used for a capital project are sold at a premium, what happens to the
premium? ANS -It is transferred to the Debt Service Fund that will account for paying off the Bonds
Generally, when bonds to be used for a capital project are sold at a discount, what happens? ANS -
Either less money will be available for use on the project or the difference will be transferred by another
fund
How are bond issue costs for a Capital Projects Fund usually handled? ANS -They are generally an
expenditure of the Capital Projects Fund
What fund is used to account for accrued interest when bonds for a capital project are sold between
interest dates? ANS -Debt Service Fund
Retention of a contractually stipulated percentage to a contractor is common until ____________. ANS
-The construction is completed and has been inspected for conformity with specifications and plans
The assets, liabilities, and fund balances of a major capital project continuing from one year to another
would appear in the ____________, with any fund balance commonly being shown in the category
labeled ____________. ANS -Governmental fund Balance Sheet;
Restricted
, If a non-cancel label lease meets any of the following criteria, it is a capital lease: ANS -- the lease
transfers ownership of the property to the lessee by the end of the lease term.
- the lease contains an option to purchase the property at a bargain price.
- the lease term is equal to or greater than 75% of the estimated economic life of the asset.
- the present value of rental or other minimum lease payments equals or exceeds 90% of the fair market
value of the asset.
If a government acquires general fixed assets under a capital lease agreement, the asset should be
recorded in the government-wide financial statements at the beginning of the agreement at the lesser
of: ANS -(1) the present value of the rental and other minimum lease payments, or
(2) the fair value of the leased property
A special assessment is a tax levy that __________, and may be either _________ types or __________.
ANS -Is assessed only against certain tax payers;
Service;
Construction types
Special assessments may be accounted for in one of two ways. It will be in a special projects fund if
_____________, or an agency fund if _____________. ANS -The government is primarily or secondarily
liable for the debt;
The government is not responsible
The Debt Service Fund is used to ___________. ANS -Account for financial resources that are intended
to provide payments of interest and principal on long-term debt
One peculiarity of the modified accrual basis of accounting as applied to debt service accounting is that
_____________. ANS -Interest on long-term debt is not accrued. It is an expenditure of the period in
which the interest becomes due
When governments use a fiscal agent to distribute interest and principal payments to bond holders, the
government first records its payment to the agent as ___________, then records __________. ANS -
Cash with Fiscal Agent;
