The Liability for General Obligation Bonds Issued for the Benefit

question 49

Multiple Choice

The liability for general obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings should be recorded in:

• A) An enterprise fund.
• B) An internal service fund.
• C) An enterprise fund and the business-like activities accounts.
• D) The governmental activities accounts.

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Definitions:

Risk-Adjusted Discount Rate

A rate of return that accounts for the risk of an investment, used in capital budgeting to discount future cash flows to their present value.

Growth Rate

The rate at which a company's earnings or revenue increases over a specified period.

Chapter 7 Bankruptcy

A form of bankruptcy that involves the liquidation of a debtor's assets to pay off creditors, resulting in the discharge of remaining debts.

Chapter 11

The chapter of the bankruptcy code dealing with reorganization. Firms in bankruptcy proceedings are commonly said to be “in Chapter 11.”