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Business Accounting FUND ACCOUNTING GOVT NONPROF

A present obligation of a firm that will be repaid in the future is referred to as a liability. These are responsibilities or debts that a business has to another individual or business. Liabilities are classified as Current liabilities, Long term liabilities, contingent liabilities To state: The correct option regarding which is not a common type of government long-term liability d. Notes Bonds −A corporate or governmental body for fulfillment of financial requirements issues the bonds to investors as a fixed obligation to pay. To raise funds for operational or infrastructural initiatives, bonds are issued. Bonds are classified as government long-term liability as they are due for more than a year in the future. Hence bonds are considered one of the common types of government long-term liability. This option is Incorrect. Contracts payables − Contract Payment refers to each regular installment for rent, principal, interest, etc. that is due from an Obligor under a Contract. Contracts payable are classified as government long-term liabilities they are due for more than a year in the future. Hence Contracts payable are considered one of the common types of government long-term liability. This option is Incorrect. Capital lease − A capital lease is a contract that allows the lessor to temporarily use an asset. In a capital lease, the leased asset is represented on the balance sheet as though the lessee truly owned it. Capital leases are classified as government long-term liability as they are due for more than a year in the future. Hence capital leases are considered one of the common types of government long-term liability. This option is Incorrect. Notes −Notes refer to the sums owed to suppliers or vendors for goods or services received but not yet paid for. Notes are classified as government short-term liability as they are due for less than a year. Hence notes are not considered the common type of government long-term liability. This option is Correct.

A present obligation of a firm that will be repaid in the future is referred to as a liability. These are responsibilities or debts that a business has to another individual or business. Liabilities are classified as Current liabilities, Long term liabilities, contingent liabilities To state: The correct option regarding which is not a common type of government long-term liability d. Notes Bonds −A corporate or governmental body for fulfillment of financial requirements issues the bonds to investors as a fixed obligation to pay. To raise funds for operational or infrastructural initiatives, bonds are issued. Bonds are classified as government long-term liability as they are due for more than a year in the future. Hence bonds are considered one of the common types of government long-term liability. This option is Incorrect. Contracts payables − Contract Payment refers to each regular installment for rent, principal, interest, etc. that is due from an Obligor under a Contract. Contracts payable are classified as government long-term liabilities they are due for more than a year in the future. Hence Contracts payable are considered one of the common types of government long-term liability. This option is Incorrect. Capital lease − A capital lease is a contract that allows the lessor to temporarily use an asset. In a capital lease, the leased asset is represented on the balance sheet as though the lessee truly owned it. Capital leases are classified as government long-term liability as they are due for more than a year in the future. Hence capital leases are considered one of the common types of government long-term liability. This option is Incorrect. Notes −Notes refer to the sums owed to suppliers or vendors for goods or services received but not yet paid for. Notes are classified as government short-term liability as they are due for less than a year. Hence notes are not considered the common type of government long-term liability. This option is Correct.

FUND ACCOUNTING GOVT NONPROF

FUND ACCOUNTING GOVT NONPROF

11th Edition

ISBN: 9780134724867

Author: Freeman

Publisher: PEARSON C

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Chapter 8, Problem 16Q

Chapter 8, Problem 1.2E

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Blockbuster Co is building a new state of the art cineplex at a cost of $3,500,000.They received a capital investment of $1,500,000. The remainder of funds will haveto be borrowed so they decided to issue bonds. They have issued 10.5%, 5-yearbonds. These bonds were issued on January 1st, 2020, and pay semi-annual intereston July 1st and January 1st. The bonds yield 10%. The year end is December 31st

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Chapter 8 Solutions

FUND ACCOUNTING GOVT NONPROF

Ch. 8 - Prob. 1Q Ch. 8 - Prob. 1.1E

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