1. Which of the following funds would use the accrual basis of accounting in preparing its fund...

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Question:

1. Which of the following funds would use the accrual basis of accounting in preparing its fund financial statements?

a. City General Fund.

b. City Hall Capital Projects Fund.

c. City Motor Pool Internal Service Fund.

d. None of the above.

2. This year, Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps. The city attorney estimates the city will be held liable by the courts and a judgment of $300,000 will result. Because of the nature of the case it will likely be four years before the city makes any payment related to the accident. The present value of the likely future payment is $251,000. In the general fund, at the end of the current fiscal year, Port City should recognize a liability of

a. $300,000.

b. $251,000.

c. $0.

d. $75,000.

3. Voters in Lincoln School District approved the construction of a new high school and approved an $8 million bond issue with a stated rate of interest of 6 percent to fund the construction. Bids were received and the low bid was $8 million. When the bonds were issued, they sold for face value less bond underwriting fees of $0.5 million. The school board voted to fund the balance of the construction by a transfer from the general fund. The entry in the capital projects fund to record the receipt of the bond proceeds should be

a. Debit Cash $7.5 million; Credit Bonds payable $7.5.

b. Debit Cash $7.5 million; Credit Other financing sources $7.5.

c. Debit Cash $7.5 million and Expenditures $0.5 million; Credit Bonds payable $8 million.

d. Debit Cash $7.5 million and Expenditures $0.5 million; Credit Other financing sources $8 million.

4. Several years ago, the City of Russell issued $7 million of 6 percent serial bonds at 101. Principal payments of $350,000 are due each June 30 for 20 years. Interest on the bonds is payable each December 31 and June 30. As of June 30, 2015, the city has not paid the June 30 principal and interest payment. The amount of interest payable (assuming an outstanding balance of $4,000,000 of bonds) that should be included on the balance sheet for the debt service fund of the City of Russell at June 30, 2015 is

a. $ -0-.

b. $168,000.

c. $210,000.

d. $420,000.

5. To elect not to capitalize works of art and similar assets, a government must see that the assets meet all of the following criteria EXCEPT

a. The assets must be held for public exhibition, education, or research in furtherance of public service, rather than for financial gain.

b. The assets must be protected, kept unencumbered, cared for, and preserved.

c. The assets must be subject to an organizational policy that requires the proceeds from sales of the collection items be used to acquire very similar items for the collection.

d. The assets must be subject to an organizational policy that requires the proceeds from sales of the collection items be used to acquire other items for the collection