Question 1

Fund basis financial statements in which capital projects funds are reported are the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

Accepted Answer

Capital projects funds are reported are the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

Question 2

A major source of funding for Capital Project Funds include the issuance of long term debt.

Accepted Answer

Long term debt issue is a major source of funding for capital projects.

Question 3

If a government has debt service due no more than one month after the end of a fiscal year and has the resources available, then it is permitted to accrue expenditures and a fund liability for the debt service.

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.

Question 4

An annuity serial bond is one where the amount of the principal increases each year by the same amount that the interest payments decrease.

Accepted Answer

The annual debt service payments remain relatively uniform over the term of the issue for an annuity serial bond. The principal repayments increase each year by approximately the same amount that interest payments decrease.

Question 5

Fixed assets of completed projects are recorded in the accounts of capital projects funds.

Accepted Answer

Fixed assets are not reported in governmental funds. They are recorded in the government-wide statements.

Question 6

Encumbrance accounting is typically not used for Permanent Funds.

Accepted Answer

Permanent and debt service funds do not use encumbrances. The general , special revenue and capital projects funds use encumbrances.

Question 7

Budgets are typically recorded for capital projects, debt service, and permanent funds.

Accepted Answer

Budgets are typically recorded for the general fund and special revenue funds. Budgets are not typically recorded for capital projects, debt service and permanent funds.

Question 8

Permanent funds reflect resources that are restricted so that principal may not be expended and earnings are used to benefit the government or its citizenry.

Accepted Answer

In a permanent fund, the principal cannot be expended. Only the income is to be used to benefit the government or its citizenry.

Question 9

Capital project funds have indefinite lives.

Accepted Answer

Capital projects funds exist only for the duration of the project for which it is created.

Question 10

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 should be accounted for in a special projects fund.

Accepted Answer

The principle is nonexpendable. The income is to benefit the government or its citizenry and will be accounted for in a permanent fund.

Question 11

A Debt Service Fund is a fund type that is used to account for revenues and other financing sources that are intended to service debt.

Accepted Answer

Debt service funds are used to account for financial resources that are intended to provide payments of interest and principal as they come due.

Question 12

If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenues of the debt service fund.

Accepted Answer

If taxes and/or are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenues of the debt service fund.

Question 13

General Funds and special revenue funds typically record budgets.

Accepted Answer

The general and special revenue funds record budgets. Capital projects, debt service and permanent funds do not typically record budgets.

Question 14

Permanent funds may spend both earnings and principal.

Accepted Answer

In a permanent fund, the principal cannot be expended. Only the income is to be used to benefit the government or its citizenry.

Question 15

Budgets are typically not recorded for Special Revenue Funds.

Accepted Answer

Special revenue funds typically record budgets.

Question 16

Since long-term liabilities are not recorded in the governmental funds, payments of debt principal are recorded as expenditures, rather than reductions of outstanding liabilities.

Accepted Answer

Payments of debt principal are recorded as expenditures in governmental funds.

Question 17

Budgets are typically recorded for Capital Projects Funds.

Accepted Answer

Capital projects funds do not typically record budgets.

Question 18

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 should be accounted for in a special revenue fund.

Accepted Answer