113.A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a (an):
A)Other Financing Source.
B)Revenue.
C)Direct addition to Fund Balance.
D)Other Financing Use.
114.Which of the following would be accounted for as a permanent fund?
A)A gift of $65,000 to a school district, to be invested permanently, with the proceeds to be awarded as college scholarships to graduating seniors.
B)A gift of $65,000 to a school district, to be used for landscaping improvements.
C)A gift of $65,000 to a city to be invested permanently, with the proceeds to be used to buy books for the city library.
D)Both A and C
115.Which of the following should be accounted for in a permanent fund?
A)A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city war memorials.
B)A gift of $100,000 to a school board, to be given out $10,000 a year to the class valedictorian as a college scholarship.
C)A gift of $100,000 to a city, to be expended next year to purchase books for the city library.
D)A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to distribute to one or more nonprofit groups.
116.Which of the following is
nottrue regarding permanent funds?
A)Permanent funds are considered governmental funds.
B)Permanent funds use the current financial resources measurement focus and modified accrual basis of accounting.
C)Permanent funds are appropriate when a gift must be invested and the proceeds used to benefit individuals or organizations.
D)Major permanent funds would be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances.
117.Which of the following is true regarding accounting for investments of permanent funds?
A)Gains and losses on investments would
not
be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances but are reported in the government-wide Statement of Activities
B)Investments with determinable fair values must be reported at fair value.
C)Both of the above are true.
D)Neither of the above is true
Use the following to answer the next four questions:
On April 1, 2015, the City of Southern Ponds issued $3,500,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,490,000 was used to construct the police station, which was completed before December 31, 2015, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2015, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $175,000 is due April 1, 2016.
118.In addition to reporting a $3,500,000 liability and a $35,000 bond premium in the government-wide Statement of Net Position, how would the bond sale be reported?
A)As a $3,500,000 liability in the government-wide Statement of Net Position and as a $3,500,000 other financing source in the debt service fund.
B)As a $3,535,000 liability in the government-wide Statement of Net Position, as a liability of $ 3,535,000 in the capital projects fund, and as another financing source of $3,535,000 in the capital projects fund.
C)A $3,535,000 other financing source in the capital projects fund, a $35,000 other financing use in the capital projects fund, and a $35,000 other financing source in the debt service fund.
D)The $3,500,000 liability in the government-wide Statement of Net Position and the $35,000 would also be recorded as a bond premium in the Statement of Net Position.
119.How would the $3,490,000 be accounted for?
A)As a capital asset in the government-wide Statement of Net Position.
B)As an expenditure in the capital projects fund.
C)As an expenditure in the capital projects fund and as an expense in the government-wide Statement of Activities.
D)Both (a) and (b).
120.What amount would be reported as debt service expenditures for 2015?
A)$ -0-.
B)$ 70,000.
C)$140,000.
D) $245,000.
121.What amount would be reported as debt service expenditures for 2016?
A)$245,000.
B)$315,000.
C)$318,150.
D)$351,750.
122.A government signed a five-year capital lease on January 1, 2015 to obtain some equipment. The lease provided that the government would make a down payment of $20,000 and four $20,000 payments each year after that, beginning January 1, 2016. The government has a fiscal year ending December 31. Upon inception of the lease, the government, in its governmental fund accounting records would:
A)Debit expenditures for $20,000 and credit cash for $20,000.
B)Debit expenditures for $100,000, credit cash for $20,000, and credit accounts payable for $80,000.
C)Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit accounts payable for the difference between the $20,000 and the present value of the future payments.
D)Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit other financing sources for the difference between the $20,000 and the present value of the future payments.
A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2015. Five payments of $9,000 each are to be made, beginning on December 31, 2015. Discounting is at 6%, computed annually. The present value of the five payments is $37,911.