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ACC 410 QUIZ 4 (1)

ACC 410 QUIZ 4 (1)

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Author: Christine Farr
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The capital project fund of a governmental entity is accounted for using which of the following bases of accounting?

Six years ago Hill City issued $10 million of 6% term bonds, due 30 years from the date of issue.  Interest on the bonds is payable semi-annually on January 1 and July 1.  Hill City has a September 30 fiscal year end.  The amount of interest payable that would be included on the balance sheet for the debt service fund of Hill City at September 30 would be

Previously Atomic City had issued bonds with a face value of $10 million to construct a new city hall.  Because the money will not be needed for several months, the city invested the bond proceeds in U.S. Government securities.  Assuming that the city maintains its books and records in a manner that facilitates the preparation of the fund financial statements, what is the appropriate entry when the City receives interest on the investments?

In which fund type would a governmental entity’s debt service  fund be found?

Use of a Debt Service Fund is required

Calhoun County makes annual transfers from the general fund to the debt service fund to pay principal and interest on long-term debt. When the County makes the transfer the entry in the debt service fund should be

Voters in Phillips City approved the construction of a new $10 million city hall building and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction.   When the bonds were issued, they sold for 101.  What are appropriate entries related to the premium? In the capital project fund

Harbor City issued 6% tax-exempt bonds and used the proceeds to acquire federal government securities yielding 7%.  After paying the interest on the tax-exempt bonds, the City cleared 1%.  This is an example of

Sister City was notified by the State that they had been awarded a $6 million grant to aid in the construction of a senior citizens center.  At the time of the notification what is the appropriate entry in the capital project fund (assuming that the City maintains its books and records in a manner to facilitate the preparation of the fund financial statements)?

With regard to the resources dedicated to the acquisition of fixed assets which will be used in general government activities, which of the following is true?

In which fund type would a governmental entity’s capital project fund be found?

Voters in Lincoln School District approved the construction of a new high school and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction.   Bids were received and the low bid was $10 million.  When the bonds were issued, they sold for face value less bond underwriting fees of $.5 million.   The School Board voted to fund the balance of the construction by a transfer from the general fund. The entry in the capital project fund to record the additional funding for the construction would be

Adams County has outstanding $10 million in bonds issued by the County to construct a sewer system in a specific area of the county.  The taxpayers in that area voted for the construction and the bonds and agreed to tax themselves to pay the principal and interest on the bonds.  The County contracted for the construction and issued the bonds but the City assumed no legal or moral obligation for the bonds.  If the special tax payments are not sufficient to make the required principal and interest payments, the County will not make up the difference.  The $10 million of bonds should appear in which fund financial statements or schedule?

Sue City has outstanding $5 million in general term  bonds used to finance the construction of the new City Library.  Sue City has a June 30 fiscal year-end.  Interest at 6% is payable each January 1 and July 1.  The principal of the bonds is due 10 years in the future.  The City budgeted the July 1, 1999 interest payment in the budget for the fiscal year ended June 30, 1999.  On June 30, cash was transferred from the General Fund to the Debt Service Fund to make the required payment.  The maximum amount of interest payable that may be included on the balance sheet of the debt service fund of Sue City at June 30 would be


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