COURSES > ACCOUNTING FOR GOVERNMENTAL AND NONPROFIT ENTITIES:, 15/E- WILSON > CONTROL PANEL > POOL MANAGER > POOL CANVAS

Pool Canvas

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Name Chapter 06 Accounting for General Long-Term Liabilities and Debt Service Description Questions which Blackboard's assessment component is incapable of supporting are not included in the export. Instructions Add Question Here

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True/False Question Both general capital assets acquired or constructed from the proceeds of special assessment debt, and the related long-term liability are recorded in the governmental fund. Answer True False Correct Feedback Incorrect Feedback GASB requires general capital assets and the related long-term liabilities to be reported in the governmentwide statements, not in governmental funds. GASB requires general capital assets and the related long-term liabilities to be reported in the governmentwide statements, not in governmental funds. Add Question Here

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True/False Question Debt backed by both special assessments and the full faith and credit of a government should be reported in the government-wide statement of net assets in the Business-type Activities column. Answer True False Correct Feedback Incorrect Feedback GASB standards require that the obligation for special assessment debt be recorded in the governmental activities accounts if the government is obligated in any manner for the debt, even though primary responsibility for the debt rests with taxpayers in the special benefit district. GASB standards require that the obligation for special assessment debt be recorded in the governmental activities accounts if the government is obligated in any manner for the debt, even though primary responsibility for the debt rests with taxpayers in the special benefit district. Add Question Here

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True/False Question When a capital lease payment of $20,000 is legally due, an entry is made in the debt service fund to record the expenditure of $20,000, and an entry is made in the governmental activities accounts to reduce Capital Lease Obligations Payable by $20,000. Answer True False Correct Feedback Incorrect Feedback The first part of the statement is correct, but the reduction of Capital Lease Obligations Payable in the governmental activities accounts should only be for the portion of the payment that is a payment on principal of the lease obligation, not for the portion that is a payment of interest on the unpaid lease obligation. The first part of the statement is correct, but the reduction of Capital Lease Obligations Payable in the governmental activities accounts should only be for the portion of the payment that is a payment on principal of the lease obligation, not for the portion that is a payment of interest on the unpaid lease obligation. Add Question Here

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True/False Question Issuance of tax supported debt having a maturity of more than one year from date of issue results in a journal entry in only the governmental activities general journal. Answer True False Correct Feedback Incorrect Feedback The fund or funds that received the proceeds of the debt must also record the issuance. The fund or funds that received the proceeds of the debt must also record the issuance. Add Question Here

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Question Debt limit is a term used to denote the total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any one time. Answer True False Correct Feedback Incorrect Feedback This paraphrases the definition given in Chapter 6. This paraphrases the definition given in Chapter 6. Add Question Here

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True/False Question Debt margin is the difference between the debt limit and the amount of outstanding debt subject to the debt limitation. Answer True False Correct Feedback Incorrect Feedback Debt margin is also called "borrowing power." Debt margin is also called "borrowing power." Add Question Here

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True/False Question Since the debt of a government is subject to a legal debt limit, there cannot be any legal overlapping debt. Answer True False Correct Feedback Incorrect Feedback Property ordinarily lies in many different taxing jurisdictions simultaneously. Although each jurisdiction may be subject to a legal debt limit, the property is taxed to service the debt of all jurisdictions within which the property is located. Property ordinarily lies in many different taxing jurisdictions simultaneously. Although each jurisdiction may be subject to a legal debt limit, the property is taxed to service the debt of all jurisdictions within which the property is located. Add Question Here

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True/False Question Disclosures about long-term liabilities should be included in the notes to the financial statements to provide users with information about authorization of new debt issues, sale of previously authorized issues, and retirement and refunding of debt during the year. Answer True False Correct Feedback Incorrect Feedback Creditors, potential creditors, and other users of financial reports are presumed to find this information helpful. Creditors, potential creditors, and other users of financial reports are presumed to find this information helpful. Add Question Here

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True/False Question Notes to the financial statements of a state or local government should include a schedule, or summary, of annual debt service requirements (principal and interest payments) for the year following the balance sheet date and for all subsequent years until the final maturity of debt outstanding on the balance sheet date. Answer True False Correct Feedback Incorrect Feedback This provision of GASB standards is described in Chapter 6. This provision of GASB standards is described in Chapter 6. Add Question Here

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True/False Question Debt service funds exist to accumulate resources to pay tax supported bond issues at maturity. Interest on such bonds is paid from General Fund appropriations rather than from debt service fund appropriations. Answer True False Correct Feedback Debt service funds are created to account for interest expenditures and revenues raised, as well as for principal repayment. Incorrect Feedback Debt service funds are created to account for interest expenditures and revenues raised, as well as for principal repayment. Add Question Here

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True/False Question All long-term debt, including bonds, notes or warrants, and various other long-term obligations, intended to be repaid from tax levies or special assessments are accounted for in debt service funds. Answer True False Correct Feedback Incorrect Feedback Debt service funds should be used to account for revenues or other financing sources used to provide debt service, and the related expenditures of these resources for the debt service. However, the long-term debt itself should be accounted for in the governmental activities accounts. Debt service funds should be used to account for revenues or other financing sources used to provide debt service, and the related expenditures of these resources for the debt service. However, the long-term debt itself should be accounted for in the governmental activities accounts. Add Question Here

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True/False Question The debt service activity of a government may be properly accounted for within the General Fund unless law mandates the use of a debt service fund. Answer True False Correct Feedback Incorrect Feedback Only those funds required by law or by sound financial management are needed. Bond covenants or ordinances are usually interpreted, however, as requiring the use of a debt service fund, and it generally is good financial management to report assets held for debt service separately from assets available for salaries, etc. Only those funds required by law or by sound financial management are needed. Bond covenants or ordinances are usually interpreted, however, as requiring the use of a debt service fund, and it generally is good financial management to report assets held for debt service separately from assets available for salaries, etc. Add Question Here

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True/False Question Taxes for debt service are always levied by the General Fund and transferred to a debt service fund. Answer True False Correct Feedback Taxes may be levied for a debt service fund directly, or debt service activity may be recorded in the General Fund. Incorrect Taxes may be levied for a debt service fund directly, or debt service activity may be recorded in the Feedback General Fund. Add Question Here

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True/False Question Debt service funds use the same budgetary procedures as the General Fund and special revenue funds. Answer True False Correct Feedback Incorrect Feedback Debt service funds, like the General Fund and special revenue funds, use Estimated Revenues and Appropriations accounts. However, unlike those funds, debt service funds do not use Encumbrance accounts. Debt service funds, like the General Fund and special revenue funds, use Estimated Revenues and Appropriations accounts. However, unlike those funds, debt service funds do not use Encumbrance accounts. Add Question Here

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True/False Question The liability for matured bonds payable should be recorded by a debt service fund only if a legal appropriation for that purpose exists in the proper amount. Answer True False Correct Feedback Incorrect Feedback Even though bonds (and interest) may mature, a debt service fund may pay matured bonds only if a legal appropriation exists. However, the bond indenture normally contains wording which contractually obligates the issuer to make principal and interest payments when due. Even though bonds (and interest) may mature, a debt service fund may pay matured bonds only if a legal appropriation exists. However, the bond indenture normally contains wording which contractually obligates the issuer to make principal and interest payments when due. Add Question...

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