ACCT 4421 Exam 2 Questions and Answers
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Reverse repurchase agreement A borrowing instrument by which a borrower (Seller)
receives cash from a broker-dealer or financial institution; In exchange, the borrower (Seller)
transfer securities to the broker-dealer or financial institution and promises to repay the cash plus
interest in exchange for the same or different securities.
Bond anticipation notes Short-term interest-bearing notes issued by a lender in the
expectation that they will soon be replaced by short-term bonds
Capital Leases A lease which is essentially an installment purchase and meets the criteria
of FASB statement No. 13. The lessee (purchaser) records the acquired property as an asset and
correspondingly recognizes the present value of the agreed upon lease payments as a liability
Certificate of participation A long-term debt instrument that, although similar in
economic substance to a bond, is secured by a long-term capital lease
, Conduit Debt Obligations issued in the name of a government on behalf of a
nongovernmental entity. The debt is expected to be serviced entirely by the nongovernmental
unit
Debt Margin The difference between the amount of debt outstanding computed according
to applicable legal provisions and the maximum amount of debt that can legally be issued
Demand Bonds Long-term debt instruments with demand "put" provisions that require
the issuer to repurchase the bonds, upon notice from the bond holder, at a specified price tat is
usually equal to the principal plus accrued interest. To ensure their ability to redeem the bonds,
issuers of demand bonds frequently enter into standby liquidity agreements ("takeout"
agreements) with banks or other financial institutions
Fiscal Funding clause A clause in a lease agreement providing that the lease is cancelable
if the legislature or other funding authority does not appropriate the funds necessary for the
government unit to fulfill its obligations under the lease agreement
Governmental funds Funds used to account for the acquisition, use, and balances of
expendable financial resources and the related current liabilities, except those accounted for in
100% Solved
Reverse repurchase agreement A borrowing instrument by which a borrower (Seller)
receives cash from a broker-dealer or financial institution; In exchange, the borrower (Seller)
transfer securities to the broker-dealer or financial institution and promises to repay the cash plus
interest in exchange for the same or different securities.
Bond anticipation notes Short-term interest-bearing notes issued by a lender in the
expectation that they will soon be replaced by short-term bonds
Capital Leases A lease which is essentially an installment purchase and meets the criteria
of FASB statement No. 13. The lessee (purchaser) records the acquired property as an asset and
correspondingly recognizes the present value of the agreed upon lease payments as a liability
Certificate of participation A long-term debt instrument that, although similar in
economic substance to a bond, is secured by a long-term capital lease
, Conduit Debt Obligations issued in the name of a government on behalf of a
nongovernmental entity. The debt is expected to be serviced entirely by the nongovernmental
unit
Debt Margin The difference between the amount of debt outstanding computed according
to applicable legal provisions and the maximum amount of debt that can legally be issued
Demand Bonds Long-term debt instruments with demand "put" provisions that require
the issuer to repurchase the bonds, upon notice from the bond holder, at a specified price tat is
usually equal to the principal plus accrued interest. To ensure their ability to redeem the bonds,
issuers of demand bonds frequently enter into standby liquidity agreements ("takeout"
agreements) with banks or other financial institutions
Fiscal Funding clause A clause in a lease agreement providing that the lease is cancelable
if the legislature or other funding authority does not appropriate the funds necessary for the
government unit to fulfill its obligations under the lease agreement
Governmental funds Funds used to account for the acquisition, use, and balances of
expendable financial resources and the related current liabilities, except those accounted for in
