Exam 6: Accounting for General Long-Term Liabilities and Debt Service

A government's MD&A states that government-wide net position decreased as a result of the issuance of a long-term liability during the current reporting period. Does this sound correct? How does the issuance of long-term debt typically affect net position in the year of issuance?

Which of the following statements is not True for debt service funds?

Which of the following statements is True?

Pollution remediation obligations arise from responsibilities related to the cleanup of hazardous wastes or hazardous substances resulting from existing pollution.

Pollution remediation obligations should be recognized if which of the following obligating events has occurred?

When Sunny City makes its annual lease payment on an unpaid lease obligation, the journal entry for the governmental activities accounts will include:

Although some governments have issued taxable debt, the interest earned on most debt issued by state and local governments is exempt from federal taxation and, in some states, from state taxation.

Debt margin 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, while debt limit is the difference between the debt margin and the amount of outstanding debt subject to the debt limitation.

Explain the essential differences between regular serial bonds, deferred serial bonds, annuity serial bonds, and irregular serial bonds. How do regular serial bonds differ from term bonds?

Term bond issues mature in installments.

Resources to pay interest on tax-supported bond issues are generally accumulated in special revenue funds.

Which of the following basic financial statements contains a column for the total of all debt service funds?

The liability for general obligation bonds should be recorded in the:

Financial statement note disclosures on long-term liabilities should include information on authorization of new debt issues, sale of previously authorized issues, and retirement and refunding of debt during the year.

On June 1, Brooktown levied special assessments in the amount of $500,000, payable in 10 equal annual installments beginning on June 30. The assessment installments are intended to pay principal and interest on special assessment bonds for which the town has pledged its full faith and credit should assessments be insufficient. Assuming no allowance for uncollectible receivables, the journal entry in the debt service fund on June 1 would include: