Multiple Choice. Choose the best answer.
1. Which of the following would not be considered a general long-term liability?
a. The estimated liability to clean up the fuel and hazard waste storage sites of the city’s Public Works Department.
b. Capitalized equipment leases of the water utility fund.
c. Compensated absences for the city’s Police Department.
d. Five-year notes payable used to acquire computer equipment for the city library.
2. Proceeds from bonds issued to construct a new county jail would most likely be recorded in the journal of the:
a. Capital projects fund.
b. Debt service fund.
c. General Fund. d Enterprise fund.
3. The long-term liability for a bond issue used to construct a new city recreation center should be recorded in the:
a. Capital projects fund general journal.
b. Debt service fund general journal.
c. Governmental activities general journal. d Both b and c.
Items 4 and S are based on the following information:
On March 2, 2010, 20-year, 6 percent, general obligation serial bonds were issued at the face amount of $3,000,000. Interest of 6 percent per annum is due semiannually on March 1 and September 1. The first payment of $150.000 for redemption of principal is due on March 1, 2011. Fiscal year-end occurs on December 31.
4. What is the interest expense for the fiscal year ending December 31, 2010?
a. $90,000.
b. $135,000.
c. $150,000.
d. None of the above.
5. What is the interest expenditure for the fiscal year ending December 31, 2010?
a. $90,000.
b. $135,000.
c. $150,000.
d. None of the above.
6. Debt service funds may be used to account for all of the following except:
a. Repayment of debt principal.
b. Lease payments under capital leases.
c. Amortization of premiums on bonds payable.
d. The proceeds of refunding bond issues.
7. Expenditures for redemption of principal of tax-supported bonds payable should be recorded in a debt service fund:
a. When the bonds are issued.
b. When the bond principal is legally due.
c. When the redemption checks are written.
d. Any of the above, if consistently followed.
8. Which of the following items would be reported in the Governmental Activities column of the government-wide financial statements?
Premium on Noncurrent Portion of General
Bonds Payable Long-term Liabilities Payable
a. Yes No
b. No No
c. No Yes
d. Yes Yes
9. Interest on general long-term debt would be recorded as an expenditure in which of the following financial statements?
a. Statement of revenues, expenditures, and changes in fund balances— governmental funds.
b. Statement of activities.
c. Both a and b are correct.
d. None of the above; interest is recorded as an expense, not an expenditure.
10. Which of the following accounts is unlikely to appear in a debt service fund ledger?
a. Estimated Revenue.
b. Appropriations.
c. Estimated Other Financing Sources.
d. Encumbrances.