1. Surfer City sold a used police car. The police car had a historical cost of $25,000, a fair value of $18,000, and was sold for $10,000. Assuming that the city maintains its books and records in a manner to facilitate the preparation of the fund financial statements, what is the appropriate entry in the general fund to record this sale?

a. Debit Cash $10,000; Credit Revenue $10,000.

b. Debit Cash $10,000 and Loss on sale $8,000; Credit Automotive equipment $18,000.

c. Debit Cash $10,000; Credit Other financing sources—sale of asset $10,000.

d. Debit Cash $10,000; Credit Automotive equipment $10,000.

2. Fair value accounting is required for investments in:

a. External investment pools

b. Open-end mutual funds

c. Bonds and other debt securities

d. All of the above

3. Pacheco City issued $20 million of bonds at par. The city loaned the proceeds to Sharpe Cheese Processors to expand the size of its facility, which would allow Sharpe to hire additional workers. The loan payments from Sharpe to the city are established to match the principal and interest payments on the bond issue. The bonds are payable exclusively from the loan repayments by Sharpe. The bonds are secured by the additional plant facilities built by Sharpe. Where should the city report the bonds in its annual financial report?

a. In the government-wide financial statements.

b. In the notes to the financial statements.

c. In the proprietary fund financial statements.

d. In any of the above ways.

4. The following transactions were among those reported by Morris City’s water utility enterprise fund for the current year: Proceeds from sales of revenue bonds - $3,900,000; Cash received from customer households - $1,600,000; and Capital contributed by subdivisions - $700,000. In the water utility enterprise fund’s statement of cash flows for the current year, what amount should be reported as cash flows from capital and related financing activities?

a. $3,900,000

b. $6,200,000

c. $5,500,000

d. $4,600,000

5. The appropriate measurement focus for the business-type activities of the Raymond City is

a. Current financial resources.

b. Economic resources.

c. Both (a) and (b).

d. None of the above.