The Following Are Transactions for the City of Clinton

question 1

Essay

The following are transactions for the city of Clinton.
a.Borrowed $100,000 by issuing a one-year,5% note,three months before year-end.
b.Accrued interest at year end,but did not pay the interest at year end.
c.Charges for services rendered of $2,500 were billed and collected immediately.
d.Incurred salary costs of $5,000,unpaid.
Required:
Analyze the above transactions by using the accounting equation for a governmental fund.

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Definitions:

Factoring Accounts Receivable

A financial transaction where a business sells its accounts receivable to a third party at a discount, in order to obtain immediate cash flow.

Face Value

The nominal value or original monetary worth of a security or financial instrument as stated by the issuer.

Self-Liquidating Loans

Loans that are structured to be paid off through the cash flow generated by the project or asset they are used to finance.

Commercial Finance Companies

Financial institutions that provide loans to businesses, typically for equipment purchases or other capital needs, often secured by the assets being financed.