Question 1

A state issues bonds, and the money received is to be used for construction of roads. The cash received from the bond issue is recorded as:

Accepted Answer

The cash received from the bond issue for construction projects like roads is recorded as an "other financing source" in the capital projects fund, which is used to account for financial resources used for the acquisition or construction of major capital facilities.

Question 2

A county remits $5 million of property tax collections to the capital projects fund for use in construction projects. The capital projects fund records the cash received as

Accepted Answer

The capital projects fund records cash received specifically for construction projects as "other financing sources" because these funds are not part of the regular revenues like taxes or fees but are instead transfers from another fund (in this case, property tax collections) designated for specific capital outlays.

Question 3

Which account will you never see on the balance sheet of a capital projects fund?

Accepted Answer

Net position invested in capital assets is a term associated with government-wide financial statements, not fund financial statements. Capital projects funds, being a type of governmental fund, report available financial resources and do not display net position or investment in capital assets in the same manner as government-wide statements.

Question 4

A county general fund provides temporary funding to its capital projects fund for a construction project. The capital projects fund will pay it back to the general fund within the same fiscal year. How will this transaction be recorded by the general fund and the capital projects fund?
 $\begin{array}{lrr} \underline{\text { General Fund}}&&&&&&&&\underline{\text { Capital Projects Fund}}\end{array}$
A)$\begin{array}{lrr}\text { Increase in current receivables}&\text { Increase in current payables}\end{array}$
B)$\begin{array}{lrr}\text { Expenditure}&&&&&&&&&\text { Revenue}\end{array}$
C)$\begin{array}{lrr}\text { Other financing use}&&&&&&\text { Increase in current payables}\end{array}$
D)$\begin{array}{lrr}\text { Other financing use}&&&&&&\text {  Other financing source}\end{array}$

Accepted Answer

The answer of A county general fund provides temporary funding...

Question 5

A $25 million contract is awarded by a county for construction of a building. Bonds are issued to finance construction, in the amount of $25 million. During the first year, $6 million is paid in cash to contractors for work done. At year-end, the capital projects fund reports the following fund balances:

Accepted Answer

The correct answer is C) Restricted, $19 million. This is because the $25 million initially obtained from issuing bonds would be considered restricted for the construction project. After paying $6 million in cash to contractors for work done, the remaining balance that is still restricted for the project would be $19 million ($25 million - $6 million = $19 million).

Question 6

A $30 million contract is awarded by a county for construction of a building. Bonds are issued to finance construction, in the amount of $30 million. During the first year, contractors bill the county $22 million for work done, and $20 million is paid in cash to contractors. At year-end, the capital projects fund reports the following fund balances:

Accepted Answer

The capital projects fund would report $8 million as restricted because that is the amount of bond proceeds remaining to be used for the construction project ($30 million - $22 million billed = $8 million remaining). The difference between what was billed and what was paid ($22 million billed - $20 million paid = $2 million) does not change the classification of the remaining funds; it merely represents an outstanding payable.

Question 7

A state government begins a project to build administrative facilities, funded by a bond issue. A capital projects fund is set up to account for the construction activities, and an encumbrance is appropriately recognized in the capital projects fund for the full amount of the construction contracts, which is $10 million. At the end of the first year, only $2 million has been billed by contractors and recorded as expenditures. At the beginning of the second year, what entry is necessary in the capital projects fund to recognize the remaining encumbrances of $8 million?

Accepted Answer

At the beginning of the second year, the remaining encumbrances of $8 million should be recognized by debiting encumbrances and crediting fund balance-restricted to reflect the commitment of funds for the remaining construction contracts.

Question 8

Use the following information to answer Questions
Construction activities for Oneida County for 2020 are as follows:
1) A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund.
2) The general fund transfers $2,000,000 to the capital projects fund.
3) $3,500,000 of the federal grant is received in cash.
4) The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest.
5) A contract for $14,800,000 is awarded to a contractor.
6) Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash.
7) The county's spending policy is to use restricted resources first.
The county uses the GAAP budgetary basis for end-of-year encumbrances.
-What is the 2020 increase in total fund balances for the capital projects fund?

Accepted Answer

11ee52c7_4cff_dc66_90ce_71e01c499905_TBCB1002_00

Question 9

Use the following information to answer Questions
Construction activities for Oneida County for 2020 are as follows:
1) A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund.
2) The general fund transfers $2,000,000 to the capital projects fund.
3) $3,500,000 of the federal grant is received in cash.
4) The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest.
5) A contract for $14,800,000 is awarded to a contractor.
6) Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash.
7) The county's spending policy is to use restricted resources first.
The county uses the GAAP budgetary basis for end-of-year encumbrances.
-What is the end-of-2020 balance in fund balance-restricted for the capital projects fund?

Accepted Answer

$7,000,000 total fund balances less $2,000,000 committed (transfer from general fund).

Question 10

Use the following information to answer Questions
Construction activities for Oneida County for 2020 are as follows:
1) A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund.
2) The general fund transfers $2,000,000 to the capital projects fund.
3) $3,500,000 of the federal grant is received in cash.
4) The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest.
5) A contract for $14,800,000 is awarded to a contractor.
6) Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash.
7) The county's spending policy is to use restricted resources first.
The county uses the GAAP budgetary basis for end-of-year encumbrances.
-What is the cash balance for the capital projects fund at the 2020 year-end?

Accepted Answer

$2,000,000 + $3,500,000 + $9,002,000 - $2,000 - $7,600,000 = $6,900,000

Question 11

Use the following information to answer Questions
Construction activities for Oneida County for 2020 are as follows:
1) A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund.
2) The general fund transfers $2,000,000 to the capital projects fund.
3) $3,500,000 of the federal grant is received in cash.
4) The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest.
5) A contract for $14,800,000 is awarded to a contractor.
6) Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash.
7) The county's spending policy is to use restricted resources first.
The county uses the GAAP budgetary basis for end-of-year encumbrances.
-What is the total for other financing sources for 2020, reported on the capital projects fund operating statement?

Accepted Answer

Bond proceeds $9,000,000
Transfer in 2,000,000
Total $11,000,000

Question 12

The pre-closing trial balance of a county's debt service fund at year-end is provided below:
$$\begin{array} { | l | c | } 
\hline & \text { Dr (Cr) } \
\hline \text { Cash } & \$ 42,000 \
\hline \text { Investments } & 8,000 \
\hline \text { Required additions } & 100,000 \
\hline \text { Required earnings } & 200 \
\hline \text { Appropriations } & ( 65,000 ) \
\hline \text { Debt service: principal } & 15,000 \
\hline \text { Debt service: interest } & 50,000 \
\hline \text { Transfersin } &\underline{ ( 100,000)}\
\hline \text { Investment income } & (205 ) \
\hline \text { Fund balance-committed } &\underline{( 49,995 )} \
\hline \text { Total } & \$ \quad 0 \
\hline
\end{array}$$ After the accounts are closed, what is the reported fund balance for the debt service fund?

Accepted Answer

The answer of The pre-closing trial balance of a county's...

Question 13

Use the following information to answer questions bellow.
The trial balance of a county's debt service fund at the beginning of the year is provided bellow:
 $$\begin{array} { | l | r | } 
\hline & \text { Dr (Cr) } \
\hline \text { Cash } & \$ 15,000 \
\hline \text { Investments } & 12,000 \
\hline \text { Fund balance-committed } &\underline{(27,000)} \
\hline \text { Total } & \$ \quad 0 \
\hline
\end{array}$$ General obligation debt payments for the year are estimated to be $80,000 for interest and $30,000 for principal. The county budget requires that the general fund transfer $100,000 to the debt service fund during the year. Income on investments is budgeted at $900. The debt service fund uses budget accounts. Transactions for the year are as follows:
•The general fund transfers $100,000 to the debt service fund.
•The capital projects fund transfers a bond premium on newly issued bonds to the debt service fund, in the amount of $1,000.
•The debt service fund invests $35,000 in securities and sells investments with a book value of $40,000 for $40,200. Interest income on securities held during the year is $375, received in cash. The fair value of investments held at year-end is $7,300.
•The debt service fund makes the principal and interest payments as budgeted.
-The balance for committed fund balance, immediately after the budget entry, is:

Accepted Answer

The committed fund balance is calculated by adjusting the initial balance with the net effect of the transactions: $27,000 (initial) + $100,000 (transfer from general fund) + $1,000 (bond premium) + $200 (gain on sale of investments) + $375 (interest income) - $80,000 (interest payment) - $30,000 (principal payment) = $17,900.

Question 14

Use the following information to answer questions bellow.
The trial balance of a county's debt service fund at the beginning of the year is provided bellow:
 $$\begin{array} { | l | r | } 
\hline & \text { Dr (Cr) } \
\hline \text { Cash } & \$ 15,000 \
\hline \text { Investments } & 12,000 \
\hline \text { Fund balance-committed } &\underline{(27,000)} \
\hline \text { Total } & \$ \quad 0 \
\hline
\end{array}$$ General obligation debt payments for the year are estimated to be $80,000 for interest and $30,000 for principal. The county budget requires that the general fund transfer $100,000 to the debt service fund during the year. Income on investments is budgeted at $900. The debt service fund uses budget accounts. Transactions for the year are as follows:
•The general fund transfers $100,000 to the debt service fund.
•The capital projects fund transfers a bond premium on newly issued bonds to the debt service fund, in the amount of $1,000.
•The debt service fund invests $35,000 in securities and sells investments with a book value of $40,000 for $40,200. Interest income on securities held during the year is $375, received in cash. The fair value of investments held at year-end is $7,300.
•The debt service fund makes the principal and interest payments as budgeted.
-The balance for committed fund balance, reported in the debt service fund's year-end balance sheet, is:

Accepted Answer

The committed fund balance is calculated as the beginning balance plus transfers and investment income, minus payments. Starting with $(27,000), add $100,000 (general fund transfer), $1,000 (bond premium), $200 (gain on sale of investments), and $375 (interest income), then subtract $80,000 (interest payment) and $30,000 (principal payment), resulting in a committed fund balance of $18,875.

Question 15

Use the following information to answer questions bellow.
The trial balance of a county's debt service fund at the beginning of the year is provided bellow:
 $$\begin{array} { | l | r | } 
\hline & \text { Dr (Cr) } \
\hline \text { Cash } & \$ 15,000 \
\hline \text { Investments } & 12,000 \
\hline \text { Fund balance-committed } &\underline{(27,000)} \
\hline \text { Total } & \$ \quad 0 \
\hline
\end{array}$$ General obligation debt payments for the year are estimated to be $80,000 for interest and $30,000 for principal. The county budget requires that the general fund transfer $100,000 to the debt service fund during the year. Income on investments is budgeted at $900. The debt service fund uses budget accounts. Transactions for the year are as follows:
•The general fund transfers $100,000 to the debt service fund.
•The capital projects fund transfers a bond premium on newly issued bonds to the debt service fund, in the amount of $1,000.
•The debt service fund invests $35,000 in securities and sells investments with a book value of $40,000 for $40,200. Interest income on securities held during the year is $375, received in cash. The fair value of investments held at year-end is $7,300.
•The debt service fund makes the principal and interest payments as budgeted.
-Investments, reported in the debt service fund's year-end balance sheet, are:

Accepted Answer

The investments at year-end are reported as $7,300, which is the fair value of investments held at year-end as stated in the information provided.

Question 16

Use the following information to answer questions bellow.
The trial balance of a county's debt service fund at the beginning of the year is provided bellow:
 $$\begin{array} { | l | r | } 
\hline & \text { Dr (Cr) } \
\hline \text { Cash } & \$ 15,000 \
\hline \text { Investments } & 12,000 \
\hline \text { Fund balance-committed } &\underline{(27,000)} \
\hline \text { Total } & \$ \quad 0 \
\hline
\end{array}$$ General obligation debt payments for the year are estimated to be $80,000 for interest and $30,000 for principal. The county budget requires that the general fund transfer $100,000 to the debt service fund during the year. Income on investments is budgeted at $900. The debt service fund uses budget accounts. Transactions for the year are as follows:
•The general fund transfers $100,000 to the debt service fund.
•The capital projects fund transfers a bond premium on newly issued bonds to the debt service fund, in the amount of $1,000.
•The debt service fund invests $35,000 in securities and sells investments with a book value of $40,000 for $40,200. Interest income on securities held during the year is $375, received in cash. The fair value of investments held at year-end is $7,300.
•The debt service fund makes the principal and interest payments as budgeted.
-On its operating statement for the year, the debt service fund reports other financing sources of:

Accepted Answer

The other financing sources include the transfer from the general fund ($100,000) and the bond premium transfer from the capital projects fund ($1,000), totaling $101,000.

Question 17

A debt service fund for serial bonds obtains its funding through transfers from the general fund. The debt service fund will most likely report which one of the following classifications of fund balance?

Accepted Answer

The answer of A debt service fund for serial bonds...

Question 18

A debt service fund makes a principal payment on general obligation bonds. This payment is reported on the debt service fund's:

Accepted Answer

Principal payments on general obligation bonds by a debt service fund are reported on the operating statement as an expenditure. This reflects the use of current financial resources to reduce long-term debt obligations.

Question 19

A debt service fund is used to report payments of principal and interest on bonds used for:

Accepted Answer

A debt service fund is specifically used in governmental accounting to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. It is associated with governmental activities, not proprietary or fiduciary activities.

Question 20

A state lottery is reported in an enterprise fund. Its statement of cash flows reports a reconciliation of:

Accepted Answer

The reconciliation in the statement of cash flows for an enterprise fund typically reconciles operating income to cash from operating activities.

Quiz 11: State and Local Governments: Other Transactions