Multiple Choice Questions 1 A city government has

obtained an
Multiple Choice Questions1. A city government has obtained an asset through a capital lease.
Which of the following is true for the government-wide financial statements?a. The accounting
parallels that used in for-profit accounting.b. The city must report another financing source.c.
The city must report an expenditure.d. Recognition of depreciation is optional.2. A city
government has a six-year capital lease for property being used within the General Fund.
Minimum lease payments total $70,000 starting next year but have a current present value of
$49,000. What is the total amount of expenditures to be recognized on the fund-based financial
statements over the six-year period?a. $-0-.b. $49,000.c. $70,000.d. $119,000.3. A city
government holds a six-year capital lease for property being used within the General Fund.
Minimum lease payments total $70,000 starting next year but have a current present value of
$49,000. What is the total amount of other financing sources to be recognized on the fund-
based financial statements over this six-year period?a. $-0-.b. $49,000.c. $70,000.d.
$119,000.4. A city government has a nine-year capital lease for property being used within the
General Fund. The lease was signed on January 1, 2010. Minimum lease payments total
$90,000 starting at the end of the first year but have a current present value of $69,000. Annual
payments are $10,000, and the interest rate being applied is 10 percent. When the first payment
is made on December 31, 2010, which of the following recordings is made?Government-Wide
Statements Fund-Based Statementsa. Interest Expense $–0– ........ Interest Expense $–0–b.
Interest Expense $6,900 ....... Expenditures $6,900c. Expenditures $10,000 ........ Expenditures
$10,000d. Interest Expense $6,900 ....... Expenditures $10,0005. A city government has a nine-
year capital lease for property being used within the General Fund. The lease was signed on
January 1, 2010. Minimum lease payments total $90,000 starting at the end of the first year but
have a current present value of $69,000. Annual payments are $10,000, and the interest rate
being applied is 10 percent. What liability is reported on the fund-based financial statements as
of December 31, 2010, after the first payment has been made?a. $–0–.b. $59,000.c. $65,900.d.
$80,000.6. A city creates a solid waste landfill. It assesses every person or company that uses
the landfill a charge based on the amount of materials contributed. In which of the following will
the landfill probably be recorded?a. General Fund.b. Special revenues funds.c. Internal service
funds.d. Enterprise funds.Use the following information for problems 7, 8, and 9A city starts a
solid waste landfill that it expects to fill to capacity gradually over a 10-year period. At the end of
the first year, it is 8 percent filled. At the end of the second year, it is 19 percent filled. Currently,
the cost of closure and postclosure is estimated at $1 million. None of this amount will be paid
until the landfill has reached its capacity.7. Which of the following is true for the Year 2
government-wide financial statements?a. Both expense and liability will be zero.b. Both
expense and liability will be $110,000.c. Expense will be $110,000 and liability will be
$190,000.d. Expense will be $100,000 and liability will be $200,000.8. If this landfill is judged to
be a proprietary fund, what liability will be reported at the end of the second year on fund-based
financial statements?a. $-0-.b. $110,000.c. $190,000.d. $200,000.9. If this landfill is judged to
be a governmental fund, what liability will be reported at the end of the second year on fund-
based financial statements?a. $-0-.b. $110,000.c. $190,000.d. $200,000.Use the following
informationUse the following information for problems 10The employees of the City of Jones
earn vacation time that totals $1,000 per week during the year. Of this amount, $12,000 is

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