ACCT 4421 EXAM SCRIPT 2026 COMPLETE
QUESTIONS AND ANSWERS
◉ Bond Refunding. Answer: The issuance of new bonds to replace
bonds already outstanding, usually with the intent of reducing debt
service costs
◉ Bonds. Answer: A written promise to pay a specified sum of money
(its face value) at one or more specified times in the future along with
periodic interest. Bonds are a form of notes payable but are
characterized by longer periods of maturity and more formal
documentation
◉ Call Prices. Answer: A predetermined price at which the issuer of
bonds may redeem the bonds irrespective of the current market price
◉ Capital Projects Funds. Answer: A fund to account for financial
resources set aside for the acquisition or construction of major capital
facilities
◉ Coupon Rate. Answer: The stated interest rate on the face of a bond;
The bond's nominal interest rate
, ◉ Debt Service Funds. Answer: A fund to account for financial
resources set aside for the payment of interest and principal on long-term
debt
◉ Economic Cost. Answer: The full cost of goods or services, as
opposed to that which might be recognized for financial accounting
◉ In-Substance Defeasance. Answer: An advance refunding (Retirement
of bonds) in which the government places sufficient resources in a trust
account to cover all required principal and interest payments on the
defeased debt. Although the government is not legally released from
being the primary obligor on the refunded bonds, the possibility of it
having to make additional payments is considered remote.
◉ Issue Costs. Answer: Costs incurred to issue bonds, such as amounts
paid to underwriters, attorneys, accountants, and printers
◉ Modified Accrual Basis. Answer: The accrual basis of accounting
adapted to the governmental fund-type measurement focus. Revenues
are recognized in the period in which they become available and
measurable. Some expenditures are recognized on a full accrual basis;
others on a cash basis
◉ Refinance. Answer: To replace existing debt with new debt, generally
to take advantage of lower interest rates, or to shorten or lengthen the
debt payout period
QUESTIONS AND ANSWERS
◉ Bond Refunding. Answer: The issuance of new bonds to replace
bonds already outstanding, usually with the intent of reducing debt
service costs
◉ Bonds. Answer: A written promise to pay a specified sum of money
(its face value) at one or more specified times in the future along with
periodic interest. Bonds are a form of notes payable but are
characterized by longer periods of maturity and more formal
documentation
◉ Call Prices. Answer: A predetermined price at which the issuer of
bonds may redeem the bonds irrespective of the current market price
◉ Capital Projects Funds. Answer: A fund to account for financial
resources set aside for the acquisition or construction of major capital
facilities
◉ Coupon Rate. Answer: The stated interest rate on the face of a bond;
The bond's nominal interest rate
, ◉ Debt Service Funds. Answer: A fund to account for financial
resources set aside for the payment of interest and principal on long-term
debt
◉ Economic Cost. Answer: The full cost of goods or services, as
opposed to that which might be recognized for financial accounting
◉ In-Substance Defeasance. Answer: An advance refunding (Retirement
of bonds) in which the government places sufficient resources in a trust
account to cover all required principal and interest payments on the
defeased debt. Although the government is not legally released from
being the primary obligor on the refunded bonds, the possibility of it
having to make additional payments is considered remote.
◉ Issue Costs. Answer: Costs incurred to issue bonds, such as amounts
paid to underwriters, attorneys, accountants, and printers
◉ Modified Accrual Basis. Answer: The accrual basis of accounting
adapted to the governmental fund-type measurement focus. Revenues
are recognized in the period in which they become available and
measurable. Some expenditures are recognized on a full accrual basis;
others on a cash basis
◉ Refinance. Answer: To replace existing debt with new debt, generally
to take advantage of lower interest rates, or to shorten or lengthen the
debt payout period
