ACC 501 CH. 6&7 EXAM QUESTIONS
AND ANSWERS 100% PASS 2026
EDITION
Which of the following would not be considered a general long-term liability?
a. The estimated liability to clean up the hazardous waste storage sites of the city's Public Works
Department
b. Capitalized equipment leases of the water utility fund
c. Compensated absences for the city's Police Department
d. Five-year notes payable used to acquire computer equipment for the city's administrative
offices. - ANS b. Capitalized equipment leases of the water utility fund
Proceeds from bonds issued to construct a new city hall would most likely be recorded in the
journal of:
a. Capital projects fund
b. Debt Service fund
c. General fund
d. Enterprise fund - ANS a. Capital projects fund
The liability for long-term debt issued to finance a capital project will appear in which financial
statement?
a. Government wide statement of net position
1
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, b. Capital projects fund balance sheet
c. Debt service fund balance sheet
d. General fund balance sheet - ANS a. Government wide statement of net position
Which one of the following statements regarding debt margin is correct?
a. Debt margin is the total amount of indebtedness of specified types of debt that is allowed by
law to be outstanding at any one time
b. Debt margin is calculated without regard to debt that is authorized but not issued yet
c. Debt margin is the difference between the legal debt limit and the amount of net
indebtedness subject to limitation
d. All of the above statements regarding debt margin are correct - ANS c. Debt margin is the
difference between the legal debt limit and the amount of net indebtedness subject to
limitation
Budgeting entries for a debt service fund would:
a. Not include an entry for estimated revenues because taxes are always recorded directly into
the General Fund
b. Include an estimated adjustment to bonds payable equal to the amount of principal
payments that will become legally due during the fiscal year
c. Include estimated other financing uses equal to the amount of interest payments that will
become legally due during the fiscal year.
d. Include appropriations for principal payments that will become legally due during the fiscal
year - ANS d. Include appropriations for principal payments that will become legally due
during the fiscal year
Debt service funds may be used to account for all of the following except:
a. Repayment of debt principal
b. Lease payments
c. Amortization of premiums on bonds payable
2
@2026 EDITION ALLRIGHTS RESERVED
AND ANSWERS 100% PASS 2026
EDITION
Which of the following would not be considered a general long-term liability?
a. The estimated liability to clean up the hazardous waste storage sites of the city's Public Works
Department
b. Capitalized equipment leases of the water utility fund
c. Compensated absences for the city's Police Department
d. Five-year notes payable used to acquire computer equipment for the city's administrative
offices. - ANS b. Capitalized equipment leases of the water utility fund
Proceeds from bonds issued to construct a new city hall would most likely be recorded in the
journal of:
a. Capital projects fund
b. Debt Service fund
c. General fund
d. Enterprise fund - ANS a. Capital projects fund
The liability for long-term debt issued to finance a capital project will appear in which financial
statement?
a. Government wide statement of net position
1
@2026 EDITION ALLRIGHTS RESERVED
, b. Capital projects fund balance sheet
c. Debt service fund balance sheet
d. General fund balance sheet - ANS a. Government wide statement of net position
Which one of the following statements regarding debt margin is correct?
a. Debt margin is the total amount of indebtedness of specified types of debt that is allowed by
law to be outstanding at any one time
b. Debt margin is calculated without regard to debt that is authorized but not issued yet
c. Debt margin is the difference between the legal debt limit and the amount of net
indebtedness subject to limitation
d. All of the above statements regarding debt margin are correct - ANS c. Debt margin is the
difference between the legal debt limit and the amount of net indebtedness subject to
limitation
Budgeting entries for a debt service fund would:
a. Not include an entry for estimated revenues because taxes are always recorded directly into
the General Fund
b. Include an estimated adjustment to bonds payable equal to the amount of principal
payments that will become legally due during the fiscal year
c. Include estimated other financing uses equal to the amount of interest payments that will
become legally due during the fiscal year.
d. Include appropriations for principal payments that will become legally due during the fiscal
year - ANS d. Include appropriations for principal payments that will become legally due
during the fiscal year
Debt service funds may be used to account for all of the following except:
a. Repayment of debt principal
b. Lease payments
c. Amortization of premiums on bonds payable
2
@2026 EDITION ALLRIGHTS RESERVED
