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Capital and Trust > Midterm > Flashcards

Midterm Flashcards

1
Q

The Capital Fund in NJ municipal accounting records the accounting for a municipality’s improvements and other capital expenditures.

A

True

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2
Q

NJSA 40A:2 the Local Bond Law, contains the provisions for authorizing improvement Authorizations to appropriate funds for the capital projects and issue debt to finance those projects.

A

True

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3
Q

A reserve for a specific improvement may be established by appropriating funds in the capital section of the Current Fund budget and transferring the funds to the Capital Fund for future use in funding a specific capital project.

A

True

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4
Q

Fund Balance or Capital Surplus may be appropriated to finance capital projects or may be transferred to the Current Fund as anticipated revenue in the Current Fund budget to reduce the payment of principal on bonds.

A

True

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5
Q

The appropriations created by the adoption of a bond ordinance or other capital ordinance are entitled Improvement Authorizations.

A

True

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6
Q

In additions to funds received in the Capital Fund from the Current Fund budget and the sale of bonds or notes, capital projects may be funded by donations for specific projects or state or federal grants for specific projects.

A

True

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7
Q

Except for expenditures from the Reserve for Preliminary Expenses, no expenditure for a capital project may be made from the Capital Fund without the adoption of an ordinance describing the project and specifying the source of funding,

A

True

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8
Q

The Local Bond Law generally requires that each municipality and county adopt a Capital Budget or Capital Plan.

A

True

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9
Q

Under regulation of the DLGS a capital budget is required when the sum of the line item capital project appropriations in the Current Fund budget exceeds
$25,000 and or a capital project ordinance if foreseen. if nether condition applies, a capital budget need not be file.

A

True

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10
Q

The capital plan is required whenever a capital budget is submitted.

A

True

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11
Q

For a municipality with a population under 10,000 the Capital Plan must cover at least three years, for municipality with a population over 10,000 the Capital Plan must cover a period from 4 to 6 years.

A

True

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12
Q

Local Bond Law provides that municipalities and counties may borrow money for any capital improvement that lawfully may be made or acquired , or for any purpose fir which the local unit lawfully may make an appropriation except for current expenses or for payment of obligations other those for temporary financing.

A

True

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13
Q

The capital budget is amended by a resolution adopted by the governing body which shall carry an explanatory statement setting forth the reason for the amendment.

A

True

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14
Q

Copies of any amendments to the capital budget must be filed with the DLGS within three day of adoption of the resolution.

A

True

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15
Q

The Cash Receipts Journal is used to provide the orderly and systematic initial record of cash received.

A

True

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16
Q

The Cash Disbursement Journal is used to provide the orderly and systematic initial record of cash disbursed.

A

True

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17
Q

The purpose of the General Journal is to record adjusting entries to the General Ledger.

A

True

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18
Q

The purpose of the General Ledger is to provide for the orderly and systematic recording of the financial transaction usually in summary form as they have been recorded in the Journal.

A

True

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19
Q

Directive 85-3 Department of Community Affairs, all municipalities are required to maintain a General Ledger 1/1/1986.

A

True

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20
Q

Directive 85-2 Department of Community Affairs, all municipalities are required to maintain a fixed assets accounting and recording 1/1/1986.

A

True

21
Q

Directive 85-1 Department of Community Affairs, all municipalities are required to maintain an encumbrance system 1/1/1986.

A

True

22
Q

The federal guidelines currently define nonexpendable personal property as tangible personal property having a useful life of more than five years and an acquisition cost of $5,000 or more per unit.

A

True

23
Q

The Local Bond Law requires a cash down payment of 20% of the Improvement Authorization authorized by a bond ordinance.

A

False. Cash down payment of 5%

24
Q

In most instances the required down payment required by the Local Bond Law can be take from the Capital Improvement Fund of Fund Balance (Capital Surplus)

A

False. Not Capital Surplus.

25
Q

Whether the state or federal grant is on a draw down basis or reimbursement basis, the grant can be used as the down payment.

A

False. Cannot be used as a down payment if on a reimbursement basis, the fund are not available until the project is completed.

26
Q

The capital budget is the first year of the Capital Improvement Program (Capital Plan) which appropriates or commits the funds for the capital projects in the current year.

A

False, Its is an idea, does not commit to anything.

27
Q

Local Bond Law provides that no local unit shall authorize obligations for any improvement or purpose having a period of usefulness of less than 3 years.

A

False. 5 years

28
Q

Local Bond Law provides that motor vehicles including original apparatus and equipment including passenger cars and station wagons can be assigned a useful life of five years for bonding purposes.

A

False. Not including passenger cars or station wagons useful life is less than 5 years.

29
Q

The Cash Receipts Journal, the Cash Disbursement Journal, General Journal, and General Ledger are all considered books of original entry.

A

False. Not the general ledger.

30
Q

Bond Anticipation Notes, which are issued in anticipation of the issuance of bonds may be issued for a period not exceeding one year.

A

True

31
Q

Bond Anticipation Notes shall mature and be paid not later than the first day of the first month following the close of the fifth fiscal year following the date of the original notes.

A

False. 10th fiscal year

32
Q

The aggregate amount of capital notes outstanding at any one time shall not exceed the lesser of $200,000 or one half of one percent of the equalized valuation basis.

A

True

33
Q

No Bond Anticipation Notes may be renewed beyond the 3rd anniversary date of the original notes unless the amount of such notes at least equal to the 1st legally payable installment of the bonds in the anticipation of which said notes are issued is paid and retired on or before said 3rd anniversary date.

A

True

34
Q

Pursuant to the Local Bond Law Bond Anticipation Notes or temporary notes may be sold at private sale pursuant to a resolution of the governing body or by a finance officer of the local unit expressly designated by resolution to sell such notes.

A

True

35
Q

The 1st legally payment installment on a Bond Anticipation Note is computed by dividing the principal amount of the note by 1.05

A

False. Life of the bond times 2 -1

36
Q

Bond Anticipation Notes and temporary notes are considered permanent financing and the proceeds from the sale of such notes permanently fund the capital project which they are issued to finance.

A

False. Temporary financing and temporary fund the capital project.

37
Q

Serial Bonds can be issued in coupon or registered form.

A

False. Not coupon

38
Q

NJSA 40A: 2-32 now allows true interest cost at the basis for bond sale awards. True interest cost calculates the present value of the bid and necessitates the use of a computer program to compare proposals,

A

True.

39
Q

Municipalities can sell bonds at public sale through sealed bids or electronically submitted proposals.

A

True.

40
Q

If the issue is 1 million or less or if no legally acceptable bids are received the first public offering the bonds may be sold at private sale within 60 days after the advertised date for public bidding as long as the terms are substantially similar to the publicly advertised terms.

A

False. 30 days

41
Q

A CFO postpone a correctly advertised public sale on 24 hour notice. A postponed public sale can be recommenced upon 48 hour notice in accordance with the terms set forth in full notice of sale. A public sale may not be postponed for more than 30 days without re-advertisement.

A

False. 60 days

42
Q

Prompt payment of both principal and interest on municipal bonds can be guaranteed by bond insurance

A

True.

43
Q

Callable Bonds are those which contain a condition that the municipality may pay the principal at some future time before the maturity date of the bonds.

A

True.

44
Q

The reason for issuing Callable Bonds is that if future interest rates increase the municipality can pay off the bonds.

A

False. Decrease

45
Q

While bonds may be issued for periods up to 40 years pursuant to the Local Bond Law, all bonds must mature within the period of average of usefulness determined in the bond ordinance.

A

True

46
Q

An underwriter will usually take the entire bond issue and sell it to their customers on the secondary bond market.

A

True

47
Q

While municipal issuers of bonds and notes are not required to register with the securities and exchange commission, sec rules make it unlawful for them to make misrepresentations or fail to disclose material facts in the connection with the purchase or sale of any security including a municipal security.

A

True.

48
Q

The Bond Counsel’s approving legal opinion is the investors assurance of a guaranteed repayment of the bond principal.

A

False. Bond Assurance

Capital and Trust (2 decks)

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