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P$7-1($Multiple Choice Problems and Computations$)$ Identify the best answer for each of the following:$1$

Questions $1$ through $3$ are based on the following scenario:

Matthew County issued a $6-$month, $6\%,$ $$1,000,000$ bond anticipation note on March $31,20$X$5,$ to provide temporary financing for a major general government capital project. The issuance of long$-$term bonds had not yet received the legally required voter approval when the financial statements were issued, but most agree the voters will approve the referendum. However, in the event that the voters reject the long$-$term bond issue, the county has other sources it can use to finance the project.

$1.$Assuming the county has incurred $$800,000$ of construction costs on the project by the end of its fiscal year $($June $30,20$X$5),$ the fund balance of the Capital Projects Fund used to account for this project would be

$$185,000.$

$$200,000.$

$($$$800,000).$

$($$$815,000).$

$2.$Assume voter approval has in fact occurred as of the end of the fiscal year and all other legal requirements related to the bond issuance have been met. The county issued the bonds after the balance sheet date $($June $30,20$X$5),$ but before the financial statements were issued and soon enough to use the bond proceeds to repay the bond anticipation notes. As of June $30,20$X$5,$ the county should report fund balance in this Capital Projects Fund of

$$185,000.$

$$200,000.$

$$800,000$ deficit.

$$815,000$ deficit.

$3.$ Assume the BANs in question $2$ were repaid when due from the proceeds of the bonds. The expenditures reported in the Capital Projects Fund for the repayment of the bond anticipation note principal and interest in the fiscal year ended June $30,20$X$6,$ would be

$$0.$

$$30,000.$

$$1,000,000.$

$$1,030,000.$Questions $4$ and $5$ are based on the following scenario:

Robeson County has a Capital Projects Fund for its courthouse renovations. The appropriation authority for the fund continues until the end of the project. The voters approved a bond issue for the specific purpose of financing courthouse renovations, and the county commissioners committed a revenue source specifically for that purpose. The commission$$s policy is that expenditures are presumed to be made first from bond proceeds, then from the committed revenue source. The fund has the following balances as of September $30,20$X$8,$ its first fiscal year end:

Revenues

$$1,500,000$

Bond proceeds $($face amount$)$

$$5,000,000$

Expenditures

$$1,500,000$

Encumbrances

$$8,000,000$

Appropriations

$$9,500,000$

$4.$ Fund Balance should be reported as follows at September $30,20$X$8$:

Restricted, $$5,000,000.$

Assigned $($by voters$)$ $$5,000,000.$

Restricted, $$3,500,000$ and Committed $$1,500,000.$

Committed, $$1,500,000$ and Assigned, $$3,500,000.$

$5.$ Assume that $$1,500,000$ of unassigned General Fund resources were transferred to the Capital Projects Fund from the General Fund to provide financing instead of the commission committing revenues specifically to the project. How should Fund Balance as of September $30,20$X$8,$ be reported?

Restricted, $$5,000,000.$

Assigned $($by voters$)$ $$5,000,000.$

Restricted, $$3,500,000$ and Assigned, $$1,500,000.$

Restricted, $$3,500,000$ and Unassigned, $$1,500,000.$

Questions $6$ through $9$ are based on the following information:

The City of Cole is installing a lighting system in the Harvey Subdivision, which is considered to be a major general government capital project for the city. The system is being financed by levying $$500,000$ of special assessments on benefited property owners and transferring $$750,000($in the next year$)$ from the General Fund. $$100,000$ of these assessments were due and collected during the current year. Also, as of the end of the fiscal year, the city had incurred expenditures of $$750,000$ on the project.

$6.$What amount of special assessment revenues should be reported in the Capital Projects Fund as of the end of the current year?

$$0$Special assessments should be accounted for in a Special Revenue Fund.

$$100,000.$

$$500,000.$

$$0$Special assessments should be accounted for as other financing sources, not revenues.

$7.$ The effect of the preceding transactions on the net change in fund balance of the Capital Projects Fund for the fiscal year would be

a decrease of $$750,000.$

a decrease of $$250,000.$

a decrease of $$650,000.$

an increase of $$500,000.$

$8.$ Assume that instead of levying the special assessments to finance a portion of the project, the city issued $$500,000$ of five$-$year, $6\%$ notes payable six months before the end of the fiscal year. The net effect of the note issuance, as well as the incurred expenditures, on the net change in fund balance of the Capital Projects Fund for the fiscal year would be

a decrease of $$750,000$ because the notes payable would be reported as a direct fund liability in the Capital Projects Fund.

an increase of $$500,000.$ The incurred expenditures would actually be reported as an increase to assets as the system will be a capitalized asset when it is completed.

a decrease of $$265,000.$

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