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2019 AICPA Released Questions FAR Blank Answer Key

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The document discusses accounting concepts related to accrual accounting, investments, and financial statement preparation. Key topics covered include accruals vs deferrals, reporting of investing activities, and reporting of stock issuances.

Accruals are concerned with expected future cash receipts and payments, while deferrals are concerned with past cash receipts and payments. Accruals affect net income while deferrals do not.

Purchases of investments should be reported as net cash used in investing activities, except for cash equivalents which are reported differently.

1. Accrual accounting involves accruals and deferrals.

Which of the following best describes accruals


and deferrals?

A.Accruals are concerned with expected future cash receipts and payments, while deferrals are
concerned with past cash receipts and payments.
B.Accruals are concerned with past cash receipts and payments, while deferrals are concerned with
expected future cash receipts and payments.
C.Both accruals and deferrals are concerned with expected future cash receipts and payments.
D.Both accruals and deferrals are concerned with past cash receipts and payments.

Item ID: 42541


Key: A
FAR.CSO.20190701: FAR.001.001.001
FAR.SSO.20190701: Remembering and Understanding:1

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2. During the current year, Cooley Co. had an unrealized gain of $100,000 on a debt investment
classified as available-for-sale. Cooley's corporate tax rate is 25%. What amount of the gain should
be included in Cooley's net income and other comprehensive income at the end of the current year?

Net income Other comprehensive income

A.$100,000 $0
B.$75,000 $25,000
C.$25,000 $75,000
D.$0 $75,000

Item ID: 42691


Key: D
FAR.CSO.20190701: FAR.001.002.003
FAR.SSO.20190701: Application:2

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3. During the year, Verity Co. purchased $200,000 of Otra Co. bonds at par and $50,000 of U.S.
Treasury bills. Verity classified the Otra bonds as available-for-sale securities and the Treasury bills
as cash equivalents. In Verity's statement of cash flows, what amount should it report as net cash
used in investing activities?

A.$0
B.$150,000
C.$200,000
D.$250,000

Item ID: 41323


Key: C
FAR.CSO.20190701: FAR.001.002.005
FAR.SSO.20190701: Application:2

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4. Ace Co. issued 1,000 shares of its $10 par value common stock for $15 per share in cash. How
should this transaction be reported in Ace's statement of cash flows for the year of issuance?

A.$15,000 cash inflow from financing activities.


B.$10,000 cash inflow from financing activities and $5,000 adjustment to arrive at cash flows from
operating activities.
C.$15,000 cash flow from investing activities.
D.$10,000 cash flow from investing activities and $5,000 adjustment to arrive at cash flows from
operating activities.

Item ID: 41547


Key: A
FAR.CSO.20190701: FAR.001.002.005
FAR.SSO.20190701: Application:2

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5. Strut Co. has a payable to its parent, Plane Co. In which of the following balance sheets should this
payable be reported separately?

Strut's Plane's consolidated


balance sheet balance sheet

A.Yes Yes
B.Yes No
C.No Yes
D.No No

Item ID: 40871


Key: B
FAR.CSO.20190701: FAR.001.002.007
FAR.SSO.20190701: Remembering and Understanding:1

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6. The primary purpose of a not-for-profit organization's statement of activities is to provide relevant
information to its

A.Resource providers.
B.Managers.
C.Beneficiaries.
D.State regulatory body.

Item ID: 40659


Key: A
FAR.CSO.20190701: FAR.001.003.002
FAR.SSO.20190701: Remembering and Understanding:1

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7. Financial statements prepared by a voluntary health and welfare nongovernmental not-for-profit
organization must report expenses by the following classification(s):

Functional Natural

A.Yes Yes
B.Yes No
C.No Yes
D.No No

Item ID: 41061


Key: A
FAR.CSO.20190701: FAR.001.003.002
FAR.SSO.20190701: Remembering and Understanding:1

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8. Zokro, a nongovernmental not-for-profit organization, uses the indirect method to prepare its
statement of cash flows. In determining its net cash provided (used) by operating activities, Sokro
must add back which of the following to the change in net assets?

A.Purchase of equipment.
B.Payment on long-term debt.
C.Depreciation.
D.Decrease in accounts payable.

Item ID: 42057


Key: C
FAR.CSO.20190701: FAR.001.003.003
FAR.SSO.20190701: Remembering and Understanding:1

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9. Box, a nongovernmental not-for-profit organization, had the following transactions during the year:

Proceeds from sale of investments $80,000


Purchase of property, plant and equipment $10,000
Proceeds from long-term debt $100,000
Loss on sale of investment $5,000

What amount should be reported as net cash provided by financing activities in Box's statement of cash
flows?

A.$70,000
B.$75,000
C.$80,000
D.$100,000

Item ID: 41867


Key: D
FAR.CSO.20190701: FAR.001.003.003
FAR.SSO.20190701: Application:2

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10. Toft Co. had 120,000 shares of common stock outstanding at January 1. On April 1, it issued 40,000
additional shares of common stock. Outstanding all year were 10,000 shares of nonconvertible
preferred stock on which a dividend of $5 per share was declared during the year. Net income for the
year was $480,000. What should Toft report as earnings per share for the year?

A.$2.69
B.$2.87
C.$3.00
D.$3.20

Item ID: 40727


Key: B
FAR.CSO.20190701: FAR.001.004.000
FAR.SSO.20190701: Application:2

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11. Swift Co. has identified three operating segments that may require separate disclosure in Swift's
general purpose financial statements for the year ended December 31, year 2. Information for year 2
follows:

Segment (in thousands)


A B C Total
Reported revenue $ 42 $ 121 $ 14 $ 177
Reported profit(loss) $ 12 $ 65 $ (3) $ 74
Assets $ 470 $ 800 $ 80 $ 1,350

Which of Swift's segments are required to be separately disclosed in its December 31, year 2, financial
statements?

A. A and B only.
B. A and C only.
C. B and C only.
D. A, B, and C.

Item ID: 41375


Key: A
FAR.CSO.20190701: FAR.001.004.000
FAR.SSO.20190701: Application:2

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12. Sussman Co. prepared cash-basis financial statements for the month ended January 31. A summary
of Sussman's January activities follows:

Credit sales of $5,600.

Collections of $1,900 relating to January credit sales.

Accrued salaries of $1,200.

By what amount will Sussman's cash-basis income for the month ended January 31 increase as a result
of restating these activities to the accrual basis of accounting?

A.$2,500
B.$3,700
C.$4,400
D.$4,900

Item ID: 41359


Key: A
FAR.CSO.20190701: FAR.001.006.000
FAR.SSO.20190701: Application:2

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13. Bailey Co. changed the accounting for insurance expense from the cash basis to the accrual basis in
the current year. In January of the prior year, Bailey recorded insurance expense of $240,000 for the
cash purchase of a four-year insurance policy. How should Bailey report the insurance transaction in
the current year's financial statements?

A.As a $180,000 debit to prepaid insurance.


B.As a $60,000 debit to insurance expense.
C.As a $60,000 debit to insurance expense, a $120,000 debit to prepaid asset, and $180,000 credit to
retained earnings.
D.As a $180,000 debit to insurance expense, a $120,000 credit to prepaid asset, and $60,000 credit to
retained earnings.

Item ID: 42425


Key: C
FAR.CSO.20190701: FAR.001.006.000
FAR.SSO.20190701: Application:2

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14. Rune Co.'s checkbook balance on December 31, was $10,000. On that date, Rune held the following
items in its safe:

$4,000 check payable to Rune, postdated January 3, and not included in the December
31 checkbook balance, in collection of a sale made in December.

$1,000 check payable to Rune, deposited December 15 and included in the December 31
checkbook balance, but returned by the bank on December 30 stamped "NSF". The check
was redeposited on January 2, and cleared on January 9.

What amount should Rune report as cash in its December 31, balance sheet?

A.$9,000
B.$10,000
C.$13,000
D.$14,000

Item ID: 40755


Key: A
FAR.CSO.20190701: FAR.002.001.000
FAR.SSO.20190701: Application:2

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15. Mast Co. converted from the FIFO method for inventory valuation to the LIFO method for financial
statement and tax purposes. During a period of inflation, would Mast's ending inventory and income
tax payable using LIFO be higher or lower than FIFO?

Ending inventory Income tax payable

A. Lower Lower
B. Higher Higher
C. Lower Higher
D. Higher Lower

Item ID: 42463


Key: A
FAR.CSO.20190701: FAR.002.003.000
FAR.SSO.20190701: Application:2

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16. Stone Co. had the following consignment transactions during December year 1:

Inventory shipped on consignment to Omega Co. $36,000


Freight paid by Stone $1,800
Inventory received on consignment from Gamma Co. $24,000
Freight paid by Gamma $1,000

No sales of consigned goods were made through December 31, year 1. What amount of consigned
inventory should be included in Stone's December 31, year 1, balance sheet?

A.$24,000
B.$25,000
C.$36,000
D.$37,800

Item ID: 41081


Key: D
FAR.CSO.20190701: FAR.002.003.000
FAR.SSO.20190701: Application:2

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17. Cobb, Inc.'s inventory at May 1 consisted of 200 units at a total cost of $1,250. Cobb uses the
periodic inventory method. Purchases for the month were as follows:

Date No. of Units Unit cost Total Cost


May 4 20 $5.80 $116.00
May 17 80 $5.50 $440.00

Cobb sold 10 units on May 14 for $120. What is Cobb's weighted average cost of goods sold for May?

A.$60.20
B.$62.10
C.$62.50
D.$65.00

Item ID: 41391


Key: A
FAR.CSO.20190701: FAR.002.003.000
FAR.SSO.20190701: Application:2

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18. Ultra Co. uses a periodic inventory system. The following are inventory transactions for the month of
January:

1/1 Beginning inventory 20,000 units at $13


1/20 Purchase 30,000 units at $15
1/23 Purchase 40,000 units at $17
1/31 Sales at $20 per unit 50,000 units

Ultra uses the LIFO method to determine the value of its inventory. What amount should Ultra report as
cost of goods sold on its income statement for the month of January?

A.$710,000
B.$750,000
C.$830,000
D.$1,000,000

Item ID: 42811


Key: C
FAR.CSO.20190701: FAR.002.003.000
FAR.SSO.20190701: Application:2

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19. Pine Co. purchased land for $450,000 as a factory site. An existing building on the site was razed
before construction began. Additional information is as follows:

Cost of razing old building $60,000


Title insurance and legal fees to purchase land $30,000

Architect's fees $95,000


New building construction cost $1,850,000

What amount should Pine capitalize as the cost of the completed factory building?

A.$2,005,000
B.$1,975,000
C.$1,945,000
D.$1,910,000

Item ID: 42307


Key: C
FAR.CSO.20190701: FAR.002.004.000
FAR.SSO.20190701: Application:2

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20. Smile, Inc. purchased a computer on May 1, for $12,000 with an estimated salvage value of $1,500
and a 3-year life. What is the depreciation expense for the year ended December 31, using the
double-declining method of depreciation?

A.$8,000
B.$7,000
C.$5,333
D.$4,667

Item ID: 41739


Key: C
FAR.CSO.20190701: FAR.002.004.000
FAR.SSO.20190701: Application:2

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21. Hall Co. purchased a machine on January 1 at a cost of $140,000. The machine had an estimated
useful life of eight years and a salvage value of $60,000. Hall chose to depreciate the machine using
the double- declining balance method. What was the carrying amount of the machine in Hall's
balance sheet at the end of its second year of operations?

A.$60,000
B.$61,250
C.$78,750
D.$80,000

Item ID: 42523


Key: C
FAR.CSO.20190701: FAR.002.004.000
FAR.SSO.20190701: Application:2

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22. Dodd Co.'s debt securities at December 31 included available-for-sale securities with a cost basis of
$24,000 and a fair value of $30,000. Dodd's income tax rate was 20%. What amount of unrealized
gain or loss should Dodd recognize in its income statement at December 31?

A.$6,000 loss.
B.$0
C.$4,800 gain.
D.$6,000 gain.

Item ID: 42443


Key: B
FAR.CSO.20190701: FAR.002.005.001
FAR.SSO.20190701: Application:2

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23. Goll Co. has a 25% interest in the common stock of Rose Co. and an 18% interest in the common
stock of Jave Co. Neither investment gives Goll the ability to exercise significant influence over either
company's operating and financial policies. Which of the two investments should Goll account for
using the equity method?

A.Both Rose and Jave.


B.Rose only.
C.Jave only.
D.Neither Rose nor Jave.

Item ID: 41631


Key: D
FAR.CSO.20190701: FAR.002.005.003
FAR.SSO.20190701: Remembering and Understanding:1

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24. Bay Co. incurred legal fees in defending its patent rights. These legal fees should be capitalized when
the outcome of the litigation is

Successful Unsuccessful

A.Yes Yes
B.Yes No
C.No No
D.No Yes

Item ID: 42399


Key: B
FAR.CSO.20190701: FAR.002.006.000
FAR.SSO.20190701: Remembering and Understanding:1

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25. Corbet Co. purchased a copyright near the beginning of the current year from an author for $20,000.
The legal life of the copyright is equivalent to the life of the author plus 50 years. Corbet expects to
sell the book for five years. What amount should Corbet report as amortization expense related to the
copyright at the end of the current year?

A.$0
B.$400
C.$500
D.$4,000

Item ID: 42665


Key: D
FAR.CSO.20190701: FAR.002.006.000
FAR.SSO.20190701: Application:2

93
26. The following information pertains to Dash Co.'s utility bills:

Period covered Amount Date paid


April 16 – May 15 $5,000 June 1
May 16 – June 15 $6,000 July 1
June 16 – July 15 $8,000 August 1

What is the amount that Dash should report as a liability in its June 30 balance sheet?

A.$6,000
B.$7,000
C.$10,000
D.$14,000

Item ID: 41845


Key: C
FAR.CSO.20190701: FAR.002.007.000
FAR.SSO.20190701: Application:2

94
27. Under state law, Boca Co. may reimburse the state directly for actual unemployment claims or it may
pay 3% of eligible gross wages. Boca believes that actual unemployment claims will be 2% of eligible
gross wages, and has chosen to reimburse the state. Eligible gross wages are defined as the first
$15,000 of gross wages paid to each employee. Boca had four employees, each of whom earned
$20,000 during the year. What amount should Boca report as accrued liability for unemployment
claims in its year-end balance sheet?

A.$1,200
B.$1,600
C.$1,800
D.$2,400

Item ID: 40915


Key: A
FAR.CSO.20190701: FAR.002.007.000
FAR.SSO.20190701: Application:2

95
28. On July 1, year 7, Dean Co. issued, at a premium, bonds with a due date of July 1, year 12. Dean
incorrectly used the straight-line method instead of the effective interest method to amortize the
premium. How were the following amounts affected by the error at June 30, year 12?

Bond carrying Retained


amount earnings

A.Overstated Understated
B.Understated Overstated
C.Overstated No effect
D.No effect No effect

Item ID: 40935


Key: D
FAR.CSO.20190701: FAR.002.008.001
FAR.SSO.20190701: Application:2

96
29. On July 1, Alto Co. split its common stock 5 for 1 when the fair value was $100 per share. Prior to the
split, Alto had 10,000 shares of $10 par value common stock issued and outstanding. After the split,
the par value of the stock

A.Remained at $10.
B.Was reduced to $8.
C.Was reduced to $5.
D.Was reduced to $2.

Item ID: 41183


Key: D
FAR.CSO.20190701: FAR.002.009.000
FAR.SSO.20190701: Application:2

97
30. Elan Co. has two employees. Each employee receives two weeks of paid vacation each year.
Vacation rights accumulate. One employee, whose weekly salary is $600, took a two-week vacation
during the year, but the other employee, who earns $800 per week, took no vacation during the year.
In its year-end financial statements, what amount should Elan report as vacation liability and
expense?

Liability Expense
A.$1,600 $1,200
B.$1,600 $2,800
C.$0 $1,200
D.$0 $2,800

Item ID: 40979


Key: B
FAR.CSO.20190701: FAR.002.011.001
FAR.SSO.20190701: Application:2

98
31. Holt Co. discovered that in the prior year, it failed to report $40,000 of depreciation related to a newly
constructed building. The depreciation was computed correctly for tax purposes. The tax rate for the
current year was 20%. How should Holt report the correction of error in the current year?

A.As an increase in accumulated depreciation of $32,000.


B.As an increase in accumulated depreciation of $40,000.
C.As an increase in depreciation expense of $32,000.
D.As an increase of depreciation expense of $40,000.

Item ID: 42683


Key: B
FAR.CSO.20190701: FAR.003.001.000
FAR.SSO.20190701: Application:2

99
32. Mill Co. reported pretax income of $152,500 for the year ended December 31. During the year-end
audit, the external auditors discovered the following errors:

Ending inventory
$30,000 overstated

Depreciation expense
$64,000 understated

What amount should Mill report as the correct pretax income for the year ended December 31?

A.$58,500
B.$118,500
C.$186,500
D.$246,500

Item ID: 42485


Key: A
FAR.CSO.20190701: FAR.003.001.000
FAR.SSO.20190701: Application:2

100
33. Arno Co. did not record a credit purchase of merchandise made prior to year end. However, the
merchandise was correctly included in the year-end physical inventory. What effect did the omission
of reporting the purchase of merchandise have on Arno's balance sheet at year end?

Assets Liabilities

A.No effect No effect


B.No effect Understated
C.Understated No effect
D.Understated Understated

Item ID: 42273


Key: B
FAR.CSO.20190701: FAR.003.001.000
FAR.SSO.20190701: Application:2

101
34. Prior to the issuance of its December 31 financial statements, Stark Co. was named as a defendant in
a lawsuit arising from an event that occurred in October. Stark's legal counsel believes that it is
reasonably possible that there will be an unfavorable outcome and that damages will range from
$100,000 to $150,000. Which amount(s) should Stark accrue and/or disclose in its December 31
financial statements?

Accrue contingent liability Disclose contingent liability

A. $100,000 $100,000 - $150,000


B. $100,000 $150,000
C. $0 $100,000 - $150,000
D. $0 $150,000

Item ID: 41475


Key: C
FAR.CSO.20190701: FAR.003.003.000
FAR.SSO.20190701: Application:2

102
35. Dari, Inc. guaranteed the debt of a related party. In December, Dari learned that it is probable it will be
required to pay between $150,000 and $200,000 within the next six months in satisfaction of its
guarantee, but no amount within that range is more likely. What amount of contingent liability should
Dari accrue in its December 31 balance sheet?

A.$200,000

B.$175,000

C.$150,000

D.$0

Item ID: 41469


Key: C
FAR.CSO.20190701: FAR.003.003.000
FAR.SSO.20190701: Application:2

103
36. True Co. did not record an accrual for a probable loss from a lawsuit in its financial statements. Which
of the following explanations for True's not accruing the probable loss is in accordance with generally
accepted accounting principles?

A.No reasonable estimate of the loss can be made.


B.An estimated range for the loss can be made but no amount in the range is more accurate than any
other amount.
C.Recognizing an amount in its financial statements would weaken the company's defense of the
lawsuit.
D.Accrual was not required because an estimated amount of the loss was disclosed in the notes to the
financial statements.

Item ID: 40787


Key: A
FAR.CSO.20190701: FAR.003.003.000
FAR.SSO.20190701: Remembering and Understanding:1

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37. Which of the following financial instruments may be considered a derivative financial instrument?

A.Option contract.
B.Municipal bond.
C.Bank certificate of deposit.
D.Money market fund.

Item ID: 40711


Key: A
FAR.CSO.20190701: FAR.003.004.000
FAR.SSO.20190701: Remembering and Understanding:1

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38. Mentor Co., a U.S. corporation, owned 100% of a Swiss corporation. The Swiss franc is the functional
currency. The remeasurement of Mentor's financial statements resulted in a $25,000 gain at year
end. The translation of the financial statements resulted in a $40,000 gain at year end. What amount
should Mentor recognize as foreign currency gain in its income statement?

A.$0
B.$25,000
C.$40,000
D.$65,000

Item ID: 42153


Key: B
FAR.CSO.20190701: FAR.003.005.000
FAR.SSO.20190701: Application:2

106
39. Brill Co. made the following expenditures relating to Product X:

Labor and material costs incurred in producing a prototype $100,000


Cost of testing the prototype $40,000

Legal costs to file a patent $5,000

Production of Product X commenced when the patent was granted. What amount of the above costs
should be expensed as research and development costs?

A.$40,000
B.$100,000
C.$140,000
D.$145,000

Item ID: 40863


Key: C
FAR.CSO.20190701: FAR.003.008.000
FAR.SSO.20190701: Application:2

107
40. Aln Co. incurred the following expenses during the current period:

Routine on-going efforts to improve an existing product $50,000


Trouble-shooting in connection with breakdowns during commercial production $75,000
Routine testing of products during commercial production for quality-control purposes $100,000

What is the total amount of research and development expense incurred by Aln during the current period?

A.$0
B.$75,000
C.$125,000
D.$175,000

Item ID: 42885


Key: A
FAR.CSO.20190701: FAR.003.008.000
FAR.SSO.20190701: Application:2

108
41. During year 2, Pipp Co. incurred the following costs to develop and produce a routine, low-risk
computer software product:

Completion of detailed program design $10,000


Costs incurred for coding and testing to establish technological feasibility $15,000
Other coding and testing costs incurred after establishment of technological feasibility $44,000

In Pipp's December 31, year 2, balance sheet, what amount should be capitalized as software cost?

A.$10,000
B.$25,000
C.$44,000
D.$59,000

Item ID: 40763


Key: C
FAR.CSO.20190701: FAR.003.009.000
FAR.SSO.20190701: Application:2

109
42. Which characteristic of information in the statistical tables included in a comprehensive annual
financial report differentiates it from information contained in the financial statements?

Data covering
financial trends Fiscal years

A. Yes Yes
B. Yes No
C. No Yes
D. No No

Item ID: 41043


Key: A
FAR.CSO.20190701: FAR.004.001.001
FAR.SSO.20190701: Remembering and Understanding:1

110
43. The city of Cobb has two trust funds for the benefit of the city's library, trust fund A and trust fund B.
Only the earnings from trust fund A can be expended and both the principal and interest from trust
fund B can be expended. How should the city of Cobb report each trust fund?

Trust fund A Trust fund B

A. Permanent Permanent
B. Permanent Special revenue
C. Special revenue Permanent
D. Special revenue Special revenue

Item ID: 42035


Key: B
FAR.CSO.20190701: FAR.004.001.003
FAR.SSO.20190701: Application:2

111
44. The City of Windemere decided to construct several large windmills to generate electrical power. The
construction was financed through a general residential property tax levy for the next ten years. Utility
revenues are intended to offset all expenses associated with the windmills. The land for the windmills
was donated to the city by a local farmer. The land from the farmer should be reported in which fund
type?

A.Special revenue.
B.Capital projects.
C.Enterprise.
D.Permanent.

Item ID: 41279


Key: C
FAR.CSO.20190701: FAR.004.001.003
FAR.SSO.20190701: Application:2

112
45. In the statement of activities for a governmental entity, revenues such as charges for building permits,
garbage collection, and dog licenses are reported as which of the following?

A.Program revenues in the category “Capital Grants and Contributions.”


B.Program revenues in the category “Charges for Services.”
C.General revenues in the category “Charges for Services.”
D.General revenues in the category “Capital Grants and Contributions.”

Item ID: 41799


Key: B
FAR.CSO.20190701: FAR.004.002.001
FAR.SSO.20190701: Remembering and Understanding:1

113
46. The statement of activities in the government-wide financial statements includes which of the
following?
A.Separate columns for governmental activities, business-type activities and discretely presented
component units.
B.Separate columns for each major governmental fund.
C.Separate columns for each nonmajor governmental fund.
D.A separate section at the bottom of the statement that shows program and general revenues.

Item ID: 41427


Key: A
FAR.CSO.20190701: FAR.004.002.001
FAR.SSO.20190701: Remembering and Understanding:1

114
47. Best County's capital projects fund had the following receipts during the year:

Transfer from the general fund $100,000


Federal capital grant $75,000
Special assessment for capital improvements $300,000

What amount of revenues should Best County report in its capital projects fund at the end of the year?

A.$75,000
B.$300,000
C.$375,000
D.$475,000

Item ID: 41965


Key: C
FAR.CSO.20190701: FAR.004.002.002
FAR.SSO.20190701: Application:2

115
48. Large City does not use the modified approach to account for roads. At the beginning of the current
year, the city spent $800,000 on new roads. The roads have a 20-year useful life. What amount
should Large City report as an expense related to the new roads in the statement of activities for the
current year?

A.$0
B.$20,000
C.$40,000
D.$800,000

Item ID: 42215


Key: C
FAR.CSO.20190701: FAR.004.004.003
FAR.SSO.20190701: Application:2

116
49. Zarr Town levied property taxes of $500,000, of which 1% is expected to be uncollectible. During the
year, Zarr Town collected $450,000. What amount of property tax revenue should Zarr Town report in
its government-wide statement of activities for the current year?

A.$0
B.$450,000
C.$495,000
D.$500,000

Item ID: 42029


Key: C
FAR.CSO.20190701: FAR.004.004.006
FAR.SSO.20190701: Application:2

117
50. In the current year, Poplar City paid $5,000 interest and $20,000 principal on its outstanding general
obligation bonds. The payment was made from a debt service fund using cash transferred earlier the
same year from the general fund. How should the city report the expenditures?

General fund Debt service fund Permanent fund

A.$25,000 $25,000 $0
B.$0 $25,000 $20,000
C.$25,000 $5,000 $0
D.$0 $25,000 $0

Item ID: 41027


Key: D
FAR.CSO.20190701: FAR.004.004.007
FAR.SSO.20190701: Application:2

118

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