5. Clifford City has issued $10 million of revenue bonds to help finance a factory for Travis, Inc., a private manufacturing company. The city owns the factory and leases it to the company. The bonds are payable exclusively from the lease payments. In the event the company defaults on its lease payments, the bondholders have claims only on the factory. The city has no obligation for the bonds other than to transmit to the bondholders the lease payments that it receives from the company. In its annual finan-cial statements the city should report the bonds

a. On its government-wide statement of net position but not in any fund statements

b. Only in notes

c. Only as required supplementary information

d. Both on its government-wide statement of net position and in its proprietary funds balance sheet

6. Which of the following is not a common reason for issuing revenue bonds rather than general obligation bonds?

a. To obtain lower interest rates

b. To incorporate debt service costs into user fees

c. To avoid debt limitations or voter approvals

d. To shift a portion of the burden of paying for the project to parties who reside outside the issuers jurisdiction but nevertheless benefit from the project

8. A state agency issues moral obligation debt. This debt

a. Is probably backed by the full faith and credit of the state

b. Is probably subject to the same debt limitations as if it had been issued by the state itself

c. Probably bears a lower interest rate than if there were no moral obligation associated with it

d. Imposes greater pressure on the agency to repay the debt than if there were no moral obligation associated with it

9. Certificates of participation have the most in common with

a. Revenue bonds

b. Pension annuities

c. Participating preferred stock

d. Operating leases