Decide whether each of the following statements makes sense (or is clearly true) or does not make sense (or is clearly false). Explain your reasoning.

The federal deficit can easily be eliminated through cuts to discretionary spending.

Facts: A county government and a legally separate organization—the Sports Stadium Authority—entered into an agreement under which the authority issued revenue bonds to construct a new stadium. Although the intent is for the authority to make debt service payments on the bonds from a surcharge on ticket sales, the county agreed to annually advance the Sports Stadium Authority the required amounts to make up any debt service shortfalls and has done so for several years. Accordingly, the county has recorded a receivable from the authority and the authority has recorded a liability to the county for all advances made under the agreement.

Ticket surcharge revenues that exceed $1,500,000 are to be paid to the county and to be applied first toward interest and then toward principal repayment of advances. Both parties acknowledge, however, that annual ticket surcharge revenues may never exceed$1,500,000 because reaching that level would require an annual paid attendance of 3,000,000. Considering that season ticket holders and luxury suite renters are not included in the attendance count, it is quite uncertain if the required trigger level will ever be reached.

The authority has twice proposed to raise the ticket surcharge amount, but the county in both cases vetoed the proposal. Thus, the lender in this transaction (the county) has imposed limits that appear to make it infeasible for the borrower (the authority) to repay the advances. Consequently, the authority’s legal counsel has taken the position that the authority is essentially a pass-through agency with respect to the advances in that the authority merely receives the advances and passes them on to a fiscal agent for debt service payments. Moreover, they note that the bonds could never have been issued without the county’s irrevocable guarantee of repayment because all parties knew from the beginning that the authority likely would not have the resources to make full debt service payments.

Based on the foregoing considerations, the authority’s legal counsel has rendered an opinion that the liability for the advances can be removed from the authority’s accounts. The county tacitly agrees that the loans (advances) are worthless because it records an allowance for doubtful loans equal to the total amount of the advances. Still, the county board of commissioners refuses to remove the receivable from its accounts because of its ongoing rights under the original agreement for repayment.

Required

Alternatively, assume you are the independent auditor for the county and, based on the same analysis you conducted for the previous requirement, indicate whether or not you concur with the county continuing to report a receivable for debt service advances on its General Fund balance sheet and government-wide statement of net position.

What concerns might arise when Congress delegates decision-making authority to unelected leaders, sometimes called the fourth branch of government?

Express the thought of sentence below in no more than four words.

Who are the ones who have risen in revolt against established authority?

The table below shows how each dollar of projected spending by the federal government for a recent year was distributed. (Source: Office of Management and Budget) Of the items listed, defense is the only discretionary spending by the federal government; all other items are fixed expenditures. The government predicted total expenses of $2,230 billion for the year.

a. Is at least one-fifth of federal spending discretionary spending?

b. Find the ratio of the fixed expenditures to the discretionary spending.

c. Find the amount of the budget to be spent on fixed expenditures.

d. Find the amount of the budget to be spent on Social Security.

Commuting Refer to the information at the left.

The Port Authority collected about $\$ 249$ million in tolls from this bridge. Write this number in scientific notation.

Which of the following is not one of the five categories of control activities?

a. Checks on recorded amounts

b. Defalcation and financial reporting

c. Clearly defined authority and responsibility

d. Segregation of duties

Classify each of the following costs for a jeans manufacturing company as a variable cost, committed fixed cost, or discretionary fixed cost.

h. Quality training for employees-typically given for 4 hours at a time, every 6 months

Each month you have $200 automatically deposited from your checking account into a discretionary savings account. Your plan is to leave the money in this account for the next 10 years in order to use the total at that time at your discretion. A scatter plot shows the number of months that have passed and the amount in your discretionary spending account each month. The explanatory x-variable is the number of months that have passed. The response y-variable is the amount in your savings account. Is there a positive or negative correlation? Explain.

Janine is analyzing spending habits of students in her high school. She finds a mean monthly discretionary expense of $70 spent on having meals out with friends. The standard deviation of a distribution is 5. What is the variance?

Express the thought of each sentence below in no more than four words.

Those who have the authority of officials often move at a slow pace.

Who is Las Casas's intended audience? What does the opening passage tell you about his view of royal authority?

The goal of Confucianism is to create

1. democratic traditions
2. challenges to authority
3. a highly ordered society
4. economic interdependence

Your study buddy queries you, "Why would governments agree to a fixed exchange rate system if central banks lose the capacity to exercise discretionary monetary policy under fixed exchange rates?" What is your reaction?