govt ch5

an encumbrance in a capital project fund is created

when a contract is signed or issued

with respect to capital projects funds which of the following is correct?

these funds commonly account for resources provided by long-term debt issues or dedicated taxes

with respect to debt service funds, which of the following is not correct?

encumbrances are recorded to reflect principle payments that are expected to come due within the current accounting period

Which of the following fund(s) should be used if resources are provided by a donor with the stipulation that they be used for the benefit of the citizenry?

Either Special revenue fund or Permanent fund, depending upon whether the principal must be maintained.

Which of the following statements regarding serial bonds is false?

The principal repayment on an annuity serial bonds decreases each year as the outstanding balance decreases.

General fixed assets that are acquired with governmental fund resources are reported as assets in the:

None of the choices are correct.

If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are:

included as revenues of the debt service fund

Governmental funds, other than the General Fund, are considered major if:

1.  Total Assets, Liabilities, Revenues, or Expenditures of that individual governmental fund are at least 10% of the corresponding total (assets, liabilities, and so forth) for all governmental funds.

2.  Total Assets, Liabilities, Revenues, or Expenditures of the individual governmental fund are at least 5% of the corresponding total for all governmental and enterprise funds combined.

both 1 and 2

On October 1, 2023, the City of Mizner issued $6,000,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $5,968,750 was used to construct the addition, which was completed prior to June 30, 2024. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2023, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $250,000 is due October 1, 2024. The fiscal year for Mizner is July 1- June 30.

How would the government account for the unused bond proceeds?

As an other financing source in the debt service fund and as an other financing use in the capital projects fund.

Grant proceeds received from the state for a capital project would be recorded in a capital projects fund of a city government as a

revenue

A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a

other Financing Source.

Which of the following is not true regarding permanent funds?

Permanent funds are appropriate when the proceeds of a gift must be used to benefit individuals or organizations.

On April 1, 2024, the City of Southern Ponds issued $5,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $4,990,000 was used to construct the police station, which was completed before December 31, 2024, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2024, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $250,000 is due April 1, 2025.

In addition to reporting Bonds Payable and (unamortized) Bond Premium in the government-wide Statement of Net Position, how would the bond sale be reported?

A $5,050,000 other financing source in the capital projects fund, a $50,000 other financing use in the capital projects fund, and a $50,000 other financing source in the debt service fund.

On April 1, 2024, the City of Southern Ponds issued $5,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $4,990,000 was used to construct the police station, which was completed before December 31, 2024, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2024, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $250,000 is due April 1, 2025.

What amount would be reported as debt service expenditures for the year ended December 31, 2025?

$445,000.

Which of the following serial bonds has the first scheduled installment delayed for a period of more than 1 year after the date of the issue?

Deferred Serial Bonds

How do capital project funds record the proceeds of debt issued?

Other Financing Sources.

During the fiscal year ended December 31, 2024, the City of Johnstown issued 5% general obligation serial bonds in the amount of $2,000,000 at 102 ($2,040,000) and used $1,990,000 of the proceeds to construct a fire station. The $40,000 premium was transferred to a debt service fund. The $10,000 left in the capital projects fund at the end of the project was later transferred to the debt service fund. The bonds were dated April 1, 2024 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2025.

How would receipt of the $40,000 premium be accounted for?

Neither of the options are correct.

During the fiscal year ended December 31, 2024, the City of Johnstown issued 5% general obligation serial bonds in the amount of $2,000,000 at 102 ($2,040,000) and used $1,990,000 of the proceeds to construct a fire station. The $40,000 premium was transferred to a debt service fund. The $10,000 left in the capital projects fund at the end of the project was later transferred to the debt service fund. The bonds were dated April 1, 2024 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2025.

What would be the amount of expenditures recorded by the debt service fund for the fiscal year ended December 31, 2025?

$295,000.

Regarding Capital Projects Funds, which of the following is incorrect?

Taxes or other revenues raised specifically for a capital project are recorded as transfers In in the capital projects fund.

Which of the following statements is correct?

The principal of a permanent fund is classified as nonspendable fund balance.