Question 1

When the city collects the special assessment, it should be accounted for in which fund of the City of Arlington?

Accepted Answer

The city is acting as an agent for the collection and payment of the special assessment related to the construction of sidewalks. Therefore, the collections should be accounted for in an Agency fund, which is used to account for resources held by the government in a purely custodial capacity.

Question 2

A government has elected to issue new debt and use the proceeds to redeem existing debt because there is an economic gain in doing so.There is, however, an "accounting loss" associated with these events.The accounting loss is defined as

Accepted Answer

The answer of A government has elected to issue new...

Question 3

When the City of Arlington levies the special assessment tax, the best entry would be

Accepted Answer

Special assessments receivable represents the amount of taxes to be collected from property owners. However, since the City of Arlington has a legal obligation to perform certain services or provide certain facilities in exchange for the special assessment taxes, it is considered a deferred inflow of resources rather than revenue. Therefore, the entry should be to debit Special assessments receivable and credit Deferred inflow of resources.

Question 4

The proceeds of the bond issue should be recorded in which fund of the City of Arlington?

Accepted Answer

The proceeds of a bond issue are used to finance capital projects, such as construction or renovation of buildings, roads, or other infrastructure. Therefore, the appropriate fund to record the proceeds would be the Capital projects fund.

Question 5

The City of Twin Falls issued $5 million in special assessment bonds to finance major reconstruction of the turbines and facilities used in generating electricity that is sold to the citizens in the surrounding area.The electric power distribution activities are accounted for in an enterprise fund, which service the debt.If the city is NOT legally obligated for the debt, the appropriate entry in the city's Electric Enterprise Fund to record this event is

Accepted Answer

The answer of The City of Twin Falls issued $5...

Question 6

When the county makes the transfer the entry in the debt service fund should be

Accepted Answer

Transfers from the general fund to the debt service fund to pay principal and interest on long-term debt are recorded as "Other financing sources-nonreciprocal transfer-in" in the debt service fund, reflecting the inflow of resources from another fund without a direct exchange.

Question 7

Assuming that the government is not obligated in any manner, the debt service transactions of a special assessment bond issue should be reported in a(n)

Accepted Answer

The answer of Assuming that the government is not obligated...

Question 8

When the city collects the special assessment, it should be accounted for in which fund of the City of Arlington?

Accepted Answer

The answer of When the city collects the special assessment,...

Question 9

The proceeds of the bond issue should be recorded in which fund of the City of Arlington?

Accepted Answer

The proceeds of a bond issue are typically used to finance capital projects, such as construction or rehabilitation of infrastructure or buildings. Therefore, the capital projects fund is the appropriate fund to record the proceeds of the bond issue.

Question 10

The City of Williamsburg decided to defease old 6 percent bonds carried in its Electric Enterprise Fund with new 4.5 percent bonds.As a result of the defeasance, the city incurred an accounting loss.The loss should be recognized

Accepted Answer

The answer of The City of Williamsburg decided to defease...

Question 11

What entry should be made on July 1 related to the interest payment?

Accepted Answer

The answer of What entry should be made on July...

Question 12

Adams County has outstanding $10 million in bonds issued 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 assess themselves to pay the principal and interest on the bonds.The county contracted for the construction and issued the bonds but assumed no legal or moral obligation for the bonds.If the special assessment payments are not sufficient to make the required principal and interest payments, the county will not make up the difference.The liability for the $10 million of bonds should appear in which fund financial statements?

Accepted Answer

Since Adams County has no legal or moral obligation for the bonds and will not make up the difference if the special assessment payments are insufficient, the liability for the bonds should not appear in the fund financial statements of Adams County.

Question 13

In its governmental fund financial statements, a government should recognize revenue from special assessments

Accepted Answer

Special assessments are recognized as revenue in the year they become available for expenditure, according to the modified accrual basis of accounting used in governmental fund financial statements. This approach aligns with the availability criterion for revenue recognition in governmental accounting.

Question 14

The City of Twin Falls issued $5 million in special assessment bonds to finance major reconstruction of the turbines and facilities used in generating electricity that is sold to the citizens in the surrounding area.The electric power distribution activities are accounted for in an enterprise fund, which will service the debt.If the city is legally obligated for the debt, the appropriate entry in the city's Electric Enterprise Fund to record this event is

Accepted Answer

Since the city issued bonds to finance the reconstruction of facilities and is legally obligated for the debt, the correct accounting entry in the Electric Enterprise Fund would be to debit Plant assets, reflecting the investment in the facilities, and credit Bonds payable, indicating the liability incurred from the bond issuance.

Question 15

In the debt service fund, what is the appropriate entry when the principal payment is made?

Accepted Answer

The answer of In the debt service fund, what is...

Question 16

Which bonds should be reported on the government-wide statement of net position?

Accepted Answer

The answer of Which bonds should be reported on the...

Question 17

How should Lewis County account for the amount transferred on June 20 if the county maintains its books and records in a manner that facilitates the preparation of fund financial statements?

Accepted Answer

Since the county maintains its books and records in a manner that facilitates the preparation of fund financial statements, it should follow the accounting principle of accrual basis. Therefore, the amount transferred on June 20 should be accounted for as an interest expense and should be debited to the Cash account with fiscal agent and Interest Expense account. The corresponding credit entry should be made to the Cash account and Interest Payable account. Option A is incorrect because it does not record any interest expense. Option C is incorrect because it does not account for the interest payable. Option D is incorrect because it only records the transfer but does not account for the interest expense.

Question 18

Cascade County issued $1 million of 6 percent term bonds at 101.These bonds will be used to finance the construction of highways.The entry in the debt service fund to record the receipt of cash should be

Accepted Answer

The answer of Cascade County issued $1 million of 6...

Question 19

In early 2014, Jackson City issued $10 million of 6 percent term bonds to finance a highway construction project.Because of problems related to the Endangered Species Act, the city deferred highway construction that year.In early 2015, the city entered into contracts for construction that will begin in summer 2015 and be completed by summer 2016.When the city realized they would not need the bond proceeds in 2015, they invested the proceeds in risk-free federal government securities bought to yield 7 percent.What potential arbitrage liability, if any, should the city recognize as a result of the year 2015 transactions?

Accepted Answer

The city invested the bond proceeds in risk-free federal government securities that yielded a higher return than the interest paid on the term bonds. Therefore, the city has no potential arbitrage liability.

Question 20

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

Accepted Answer

This is an example of arbitrage, where Harbor City earned a higher yield (7%) on the securities it acquired than the interest paid on the tax-exempt bonds (6%), resulting in a profit of 1%. However, it is important to note that not all forms of arbitrage are legal or ethical.

Quiz 6: Accounting for Capital Projects and Debt Service

When the city collects the special assessment, it should be accounted for in which fund of the City of Arlington?

A government has elected to issue new debt and use the proceeds to redeem existing debt because there is an economic gain in doing so.There is, however, an "accounting loss" associated with these events.The accounting loss is defined as

When the City of Arlington levies the special assessment tax, the best entry would be

The proceeds of the bond issue should be recorded in which fund of the City of Arlington?

When the county makes the transfer the entry in the debt service fund should be

Assuming that the government is not obligated in any manner, the debt service transactions of a special assessment bond issue should be reported in a(n)

When the city collects the special assessment, it should be accounted for in which fund of the City of Arlington?

The proceeds of the bond issue should be recorded in which fund of the City of Arlington?

The City of Williamsburg decided to defease old 6 percent bonds carried in its Electric Enterprise Fund with new 4.5 percent bonds.As a result of the defeasance, the city incurred an accounting loss.The loss should be recognized

What entry should be made on July 1 related to the interest payment?

In its governmental fund financial statements, a government should recognize revenue from special assessments

In the debt service fund, what is the appropriate entry when the principal payment is made?

Which bonds should be reported on the government-wide statement of net position?

How should Lewis County account for the amount transferred on June 20 if the county maintains its books and records in a manner that facilitates the preparation of fund financial statements?

Cascade County issued $1 million of 6 percent term bonds at 101.These bonds will be used to finance the construction of highways.The entry in the debt service fund to record the receipt of cash should be

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