NFP - Test 2 - Ch 8 UPDATED ACTUAL
Exam Questions and CORRECT Answers
Which of the following is true with respect to bankruptcy - CORRECT ANSWER - Many
major cities have avoided bankruptcy by being placed under the control of financial control
boards by their state governments.
A government issues $1M in 30-year, 6% coupon bonds at a discount of $27,092. The bonds
were sold to yield 6.2%. At what amount would the bonds be reported (net) in the government-
wide statement of net assets and governmental fund balance sheet immediately upon issuance? -
CORRECT ANSWER - Government Wide: $972,908 (1M - Discount)
Governmental: $0
The government issues the bonds described in question 2. It makes its first semiannual interest
payment of $30,000. How much interest expense/expenditure would it likely have to report in its
government wide and governmental fund statements? - CORRECT ANSWER -
Government Wide: $30,160 ($30K + $160(amortization))
Governmental: $30K
The government makes subsequent payments interest payments. Reported interest
expense/expenditure in its government wide and governmental fund statements will: -
CORRECT ANSWER - Government Wide: Increase
Governmental: Stay the same
Suppose a government issues $1M in bonds at a premium of $50K. It temporarily invest the
proceeds of $1,050,000 in U.S. Treasury bonds having a face value of $1M. At what value would
the government report the bonds payable and the investment in bonds in its government wide
statements subsequent to the date of th transactions? - CORRECT ANSWER - Bonds
Payable: Amortized Cost
Investment in Bonds: Market Value
Exam Questions and CORRECT Answers
Which of the following is true with respect to bankruptcy - CORRECT ANSWER - Many
major cities have avoided bankruptcy by being placed under the control of financial control
boards by their state governments.
A government issues $1M in 30-year, 6% coupon bonds at a discount of $27,092. The bonds
were sold to yield 6.2%. At what amount would the bonds be reported (net) in the government-
wide statement of net assets and governmental fund balance sheet immediately upon issuance? -
CORRECT ANSWER - Government Wide: $972,908 (1M - Discount)
Governmental: $0
The government issues the bonds described in question 2. It makes its first semiannual interest
payment of $30,000. How much interest expense/expenditure would it likely have to report in its
government wide and governmental fund statements? - CORRECT ANSWER -
Government Wide: $30,160 ($30K + $160(amortization))
Governmental: $30K
The government makes subsequent payments interest payments. Reported interest
expense/expenditure in its government wide and governmental fund statements will: -
CORRECT ANSWER - Government Wide: Increase
Governmental: Stay the same
Suppose a government issues $1M in bonds at a premium of $50K. It temporarily invest the
proceeds of $1,050,000 in U.S. Treasury bonds having a face value of $1M. At what value would
the government report the bonds payable and the investment in bonds in its government wide
statements subsequent to the date of th transactions? - CORRECT ANSWER - Bonds
Payable: Amortized Cost
Investment in Bonds: Market Value
