NFP - Test 2 - Ch 6 Exam Questions and
Answers 100% Pass
A government opts to set aside $10M of general fund resources to finance a
new city hall. Construction is expected to begin in several years, when the
city has been able to accumulate additional resources. - ✔✔The
government may account for the $10M in a capital projects fund, but in its
government wide statements it may not report the $10M as "restricted"
A government should distinguish underwriting and other issue costs from
bond premiums and discounts and in a governmental fund should -
✔✔Report them as expenditures
When a government issues bonds at premiums or discounts and records
the proceeds in a capital projects fund, it should - ✔✔Transfer an amount
equal to the premiums from the capital projects fund to a debt service fund,
but make no transfer of an amount equal to the discounts from a debt
service to a capital projects fund.
1
Katelyn Whitman, All Rights Reserved © 2025
, A city holds U.S. Treasury notes as an investment in a capital projects fund.
During the year the market value of the notes increases by $50K. Of this
amount, $14K can be attributed to a decline in prevailing interest rates and
$36K to interest that has been earned but not yet received. As of year -end
the city should recognize as revenue - ✔✔$50K
Which of the following accounts is least likely to be shown on the balance
sheet of a debt service fund? - ✔✔Bonds Payable
Special assessment debt should be reported on the balance sheet of a city if
the debt is to be paid from assessments on property owners and - ✔✔1. The
city has guaranteed payment of the debt and probability of the city having
to make good on the guarantee is >= 50%
2. The city has guaranteed payment of the debt but the probability of the
city having to make good on the guarantee is remote.
2
Katelyn Whitman, All Rights Reserved © 2025
Answers 100% Pass
A government opts to set aside $10M of general fund resources to finance a
new city hall. Construction is expected to begin in several years, when the
city has been able to accumulate additional resources. - ✔✔The
government may account for the $10M in a capital projects fund, but in its
government wide statements it may not report the $10M as "restricted"
A government should distinguish underwriting and other issue costs from
bond premiums and discounts and in a governmental fund should -
✔✔Report them as expenditures
When a government issues bonds at premiums or discounts and records
the proceeds in a capital projects fund, it should - ✔✔Transfer an amount
equal to the premiums from the capital projects fund to a debt service fund,
but make no transfer of an amount equal to the discounts from a debt
service to a capital projects fund.
1
Katelyn Whitman, All Rights Reserved © 2025
, A city holds U.S. Treasury notes as an investment in a capital projects fund.
During the year the market value of the notes increases by $50K. Of this
amount, $14K can be attributed to a decline in prevailing interest rates and
$36K to interest that has been earned but not yet received. As of year -end
the city should recognize as revenue - ✔✔$50K
Which of the following accounts is least likely to be shown on the balance
sheet of a debt service fund? - ✔✔Bonds Payable
Special assessment debt should be reported on the balance sheet of a city if
the debt is to be paid from assessments on property owners and - ✔✔1. The
city has guaranteed payment of the debt and probability of the city having
to make good on the guarantee is >= 50%
2. The city has guaranteed payment of the debt but the probability of the
city having to make good on the guarantee is remote.
2
Katelyn Whitman, All Rights Reserved © 2025
