$1.$ A government that is unable to satisfy claims against it

a$)$ Is prohibited from filing bankruptcy.

b$)$ May seek protection under the Federal Bankruptcy Code, using the same section that is used by businesses.

c$)$ May seek protection under the Federal Bankruptcy Code, using a special section directed to governments.

d$)$ Is automatically placed under the jurisdiction of a higher level of government.

$2.$ To seek protection under the Federal Bankruptcy Code, a government must

a$)$ Be unable to provide the level of services it has provided in the recent past.

b$)$ Be unable to pay its debts in the current year.

c$)$ Have budgeted expenditures in excess of revenues.

d$)$ Both $($b$)$ and $($c$).$

$3.$ General long$-$term debt of a government includes

a$)$ All future financial obligations.

b$)$ All future financial obligations that result from past transactions.

c$)$ All future financial obligations that result from past transactions for which the government has already received a benefit.

d$)$ All future financial obligations that are backed by the government$$s general credit and revenue raising power and that result from past transactions for which the government has already received a benefit.

$4.$ When the proceeds of long term debt are reported in governmental fund financial statements

a$)$ They are reported only as an increase in liabilities in the funds.

b$)$ They are reported only as revenues in the funds.

c$)$ They are reported only as an other financing source$$debt proceeds.

d$)$ They are reported only as an other financing use$$debt proceeds.

$5.$ In governmental fund financial statements, the assets acquired under a capital lease would be reported at

a$)$ The total of all payments required under the lease.

b$)$ The present value of the required lease payments.

c$)$ The undiscounted total of required lease payments.

d$)$ They are not reported in the fund financial statements.

$6.$ In the government$-$wide financial statements, the assets acquired under a capital lease would be reported at

a$)$ The total of all payments required under the lease.

b$)$ The present value of the required lease payments.

c$)$ The undiscounted total of required lease payments.

d$)$ They are not reported in the government$-$wide financial statements.

$7.$ Salvador County issued $$25$ million of $5$ percent demand bonds for construction of a county maintenance building. The county has no take$-$out agreement related to the bonds. It estimates that $20$ percent of the bonds would be demanded $($called$)$ by the buyers if interest rates increased by at least one percentage point. At year$-$end, rates on comparable debt were $7$ percent. How should these demand bonds be reported in the government$-$wide financial statements at year$-$end?

a$)$ $$25$ million in the long$-$term liabilities section of the governmental activities column.

b$)$ $$5$ million in the current liabilities section of the governmental activities column AND $$20$ million in the long$-$term liabilities section of the governmental activities column.

c$)$ $$5$ million in the governmental activities column AND $$20$ million would be reported in the schedule of changes in long$-$term obligations.

d$)$ $$25$ million in the current liabilities section of the governmental activities column.

$8.$ Salvador County issued $$25$ million of $5$ percent demand bonds for construction of a county maintenance building. Before year$-$end the county entered into a two$-$year noncancellable take$-$out agreement with a local bank with a $10-$year payback period. The county estimates that $20$ percent of the bonds would be demanded $($called$)$ by the buyers if interest rates increased by at least One percentage point. At year$-$end, rates on comparable debt were $7$ percent. How should these demand bonds be reported in the county$$s government$-$wide financial statements at year$-$end?

a$)$ $$25$ million in the long$-$term liabilities section of the governmental activities column.

b$)$ $$5$ million in the current liabilities section of the governmental activities column AND $$20$ million in the long$-$term liabilities section of the governmental activities column.

c$)$ $$5$ million in the governmental activities column AND $$20$ million would be reported in the schedule of changes in long$-$term obligations.

d$)$ $$25$ million in the current liabilities section of the governmental activities column.