Adams County Has Outstanding $10 Million in Bonds Issued by the County

question 39

Multiple Choice

Adams County has outstanding $10 million in bonds issued by the County to construct a sewer system in a specific area of the county.The taxpayers in that area voted for the construction and the bonds and agreed to tax themselves to pay the principal and interest on the bonds.The County contracted for the construction and issued the bonds but the City assumed no legal or moral obligation for the bonds.If the special tax payments are not sufficient to make the required principal and interest payments, the County will not make up the difference.The $10 million of bonds should appear in which fund financial statements or schedule?

• A)Capital Project Fund.
• B)Special Assessment Fund.
• C)Schedule of Long-term Obligations.
• D)The bonds need not appear on the face of the financial statements of Adams County.

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Definitions:

Short-Term Credit

Loans or credit facilities intended to be repaid within a short period, typically less than one year, used for fulfilling immediate financial needs.

Daily Operations

The day-to-day activities necessary for a business to function smoothly, including production, sales, and administrative tasks.

Compensating Balance

A minimum account balance that a borrower is required to maintain with a lender as a condition for a loan, intended to compensate the bank for providing the loan or credit line.

Effective Interest Rate

The actual return on an investment or the actual cost of a loan, taking into account the compounding of interest over time, as opposed to the nominal interest rate.