Question 1

Bond refunding is repurchasing bonds from bondholders using residual money left over after a capital project has been completed.

Accepted Answer

Bond refunding is issuing new debt to replace old debt. New debt is issued and the proceeds are used to call the existing debt.

Question 2

If a sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted Fund Balance.

Accepted Answer

If a sinking fund is required by creditor or law, the unexpended resources of its debt service fund would be classified as restricted.

Question 3

Net assets represented by supplies and prepaid expenses are classified in governmental funds as Nonspendable Fund balance.

Accepted Answer

If a governmental fund has unused supplies or prepaid expenses, those resources would be classified as nonspendable fund balance.

Question 4

Debt service funds should accrue interest and report principle payments due within the next12 months following year end.

Accepted Answer

In a debt service fund, interest is generally not accrued. Interest and principle payments are recognized as an expenditure in the year in which the payment is due.

Question 5

The fund balance of permanent funds should be classified as Nonspendable, Spendable and Committed.

Accepted Answer

The principal of a permanent fund must be maintained so it is classified s nonspendable fund balance. The remaining unexpended resources would be classified as restricted or assigned fund balance.

Question 6

The portion of a permanent fund which is spendable should be reported as Unassigned Fund Balance.

Accepted Answer

The principal of a permanent fund must be maintained so it is classified s nonspendable fund balance. The remaining unexpended resources would be classified as restricted or assigned fund balance.

Question 7

All of the governmental funds except permanent funds use the modified accrual basis of accounting.

Accepted Answer

All of the governmental funds use the modified accrual basis of accounting.

Question 8

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Restricted Fund Balance

Accepted Answer

Intergovernmental grants and taxes dedicated to capital improvements are likely to be classified as restricted.

Question 9

Positive fund balances of capital projects funds are classified as nonspendable, restricted, committed, or assigned.

Accepted Answer

Fund balances of capital projects funds are classified among the categories identified in GASB Statement 54 as nonspendable, restricted, committed, or assigned. It is common for net resources positive fund balance) in a capital projects fund to be classified as restricted.

Question 10

Unexpended resources transferred to the debt service fund from the General Fund would typically be classified as Restricted Fund Balance.

Accepted Answer

Unexpended resources transferred to the debt service fund from the General Fund would typically be classified as Restricted Fund Balance or Assigned Fund Balance.

Question 11

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Committed Fund Balance

Accepted Answer

Intergovernmental grants and taxes dedicated to capital improvements are likely to be classified as restricted. Resources not meeting the definition of restricted are likely to be reported as committed fund balance.

Question 12

Capital Projects funds recognize expenses, but not encumbrances.

Accepted Answer

Capital Projects funds recognize expenditures, not expenses and encumbrances are recorded.

Question 13

Any governmental fund may have a positive Unassigned Fund Balance.

Accepted Answer

Only the general fund has an unassigned fund balance.

Question 14

Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.

Accepted Answer

Interest on long term debt is not generally accrued. GASB permits one exception: If a government has resources available for payment in a debt service fund and the period of time until interest or principal payment is due no more than one month, then the interest or principal payment may be accrued at year end but is not required.

Question 15

The principal of permanent funds is classified as Nonspendable Fund Balance.

Accepted Answer

The principal of a permanent fund must be maintained so it is classified s nonspendable fund balance. The remaining unexpended resources would be classified as restricted or assigned fund balance.

Question 16

Fund balances of debt service funds are classified among the categories of Restricted and Unrestricted.

Accepted Answer

Unexpended resources transferred to the debt service fund from the General Fund would typically be classified as Restricted or Assigned Fund Balance.

Question 17

Because debt service and permanent funds use modified accrual accounting, these funds would typically record encumbrances.

Accepted Answer

Only the General Fund, Special Revenue and Capital Projects funds record encumbrances. Debt Service and Permanent funds do not record encumbrances.

Question 18

Because capital project, debt service and permanent funds use modified accrual accounting, these funds would typically record budgets.

Accepted Answer

Only the General Fund and Special Revenue funds record budgets.

Question 19

The residual classification for governmental fund balances other than the General Fund is Assigned.

Accepted Answer

Any funds not meeting the criteria for restricted or committed would be reported as assigned; the residual classification for funds other than the general fund. The government's decision to record resources in a special revenue, capital projects, debt service or permanent funds is an indication that the resources are at least assigned to a particular purpose.

Question 20

The principal of permanent funds must be classified as Restricted Fund Balance.

Accepted Answer

The principal of a permanent fund must be maintained so it is classified s nonspendable fund balance. The remaining unexpended resources would be classified as restricted or assigned fund balance.

Quiz 5: Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

Bond refunding is repurchasing bonds from bondholders using residual money left over after a capital project has been completed.

If a sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted Fund Balance.

Net assets represented by supplies and prepaid expenses are classified in governmental funds as Nonspendable Fund balance.

Debt service funds should accrue interest and report principle payments due within the next12 months following year end.

The fund balance of permanent funds should be classified as Nonspendable, Spendable and Committed.

The portion of a permanent fund which is spendable should be reported as Unassigned Fund Balance.

All of the governmental funds except permanent funds use the modified accrual basis of accounting.

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Restricted Fund Balance

Positive fund balances of capital projects funds are classified as nonspendable, restricted, committed, or assigned.

Unexpended resources transferred to the debt service fund from the General Fund would typically be classified as Restricted Fund Balance.

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Committed Fund Balance

Capital Projects funds recognize expenses, but not encumbrances.

Any governmental fund may have a positive Unassigned Fund Balance.

Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.

The principal of permanent funds is classified as Nonspendable Fund Balance.

Fund balances of debt service funds are classified among the categories of Restricted and Unrestricted.

Because debt service and permanent funds use modified accrual accounting, these funds would typically record encumbrances.

Because capital project, debt service and permanent funds use modified accrual accounting, these funds would typically record budgets.

The residual classification for governmental fund balances other than the General Fund is Assigned.

The principal of permanent funds must be classified as Restricted Fund Balance.