Public Debt and Fiscal Risks Quiz

Government Accounting · Topic 9

Public Debt and Fiscal Risks Quiz

Work through 25 multiple-choice questions, one at a time. Submit each answer for feedback. At the end, review your score and see which concepts to revisit.

Review the Q&A Government Accounting quiz path

1. A government must refinance a large bond issue next quarter. Which concept best fits this case?Refinancing riskProvisionContingent liability disclosureExchange rate exposure

2. A state guarantees a utility loan whose borrower has weakened. Which concept best fits this case?Refinancing riskContingent liability disclosureExchange rate exposureGuarantee exposure

3. A city has a present obligation with a probable outflow that can be reliably estimated and meets applicable recognition criteria. Which concept best fits this case?Refinancing riskGuarantee exposureProvisionExchange rate exposure

4. A ministry faces a lawsuit with possible outflow that is not remote but does not qualify for recognition. Which concept best fits this case?Refinancing riskContingent liability disclosureGuarantee exposureProvision

5. Much of the government’s debt is denominated in foreign currency. Which concept best fits this case?Exchange rate exposureGuarantee exposureProvisionContingent liability disclosure

6. A government must refinance a large bond issue next quarter. What is the most appropriate next step?Assess applicable measurement and disclosure requirements and monitor borrower performanceEvaluate and make the required note disclosuresMap maturities against available financing and stress-test borrowing conditionsAssess how currency shocks affect debt amounts and service costs

7. A state guarantees a utility loan whose borrower has weakened. What is the most appropriate next step?Map maturities against available financing and stress-test borrowing conditionsAssess applicable measurement and disclosure requirements and monitor borrower performanceRecognize and measure the provision under the applicable standardAssess how currency shocks affect debt amounts and service costs

8. A city has a present obligation with a probable outflow that can be reliably estimated and meets applicable recognition criteria. What is the most appropriate next step?Recognize and measure the provision under the applicable standardMap maturities against available financing and stress-test borrowing conditionsAssess applicable measurement and disclosure requirements and monitor borrower performanceEvaluate and make the required note disclosures

9. A ministry faces a lawsuit with possible outflow that is not remote but does not qualify for recognition. What is the most appropriate next step?Assess applicable measurement and disclosure requirements and monitor borrower performanceRecognize and measure the provision under the applicable standardAssess how currency shocks affect debt amounts and service costsEvaluate and make the required note disclosures

10. Much of the government’s debt is denominated in foreign currency. What is the most appropriate next step?Map maturities against available financing and stress-test borrowing conditionsRecognize and measure the provision under the applicable standardAssess how currency shocks affect debt amounts and service costsEvaluate and make the required note disclosures

11. A government must refinance a large bond issue next quarter. Which evidence is most directly useful?Debt maturity schedule and funding scenariosGuarantee terms, financial statements and default indicatorsLegal assessment and documented measurement estimateCurrency breakdown and exchange-rate sensitivity analysis

12. A state guarantees a utility loan whose borrower has weakened. Which evidence is most directly useful?Debt maturity schedule and funding scenariosLegal assessment and documented measurement estimateCounsel’s assessment and applicable disclosure criteriaGuarantee terms, financial statements and default indicators

13. A city has a present obligation with a probable outflow that can be reliably estimated and meets applicable recognition criteria. Which evidence is most directly useful?Guarantee terms, financial statements and default indicatorsCounsel’s assessment and applicable disclosure criteriaLegal assessment and documented measurement estimateCurrency breakdown and exchange-rate sensitivity analysis

14. A ministry faces a lawsuit with possible outflow that is not remote but does not qualify for recognition. Which evidence is most directly useful?Debt maturity schedule and funding scenariosCounsel’s assessment and applicable disclosure criteriaLegal assessment and documented measurement estimateCurrency breakdown and exchange-rate sensitivity analysis

15. Much of the government’s debt is denominated in foreign currency. Which evidence is most directly useful?Currency breakdown and exchange-rate sensitivity analysisDebt maturity schedule and funding scenariosGuarantee terms, financial statements and default indicatorsCounsel’s assessment and applicable disclosure criteria

16. A government must refinance a large bond issue next quarter. Which conclusion is best supported?A guarantee can produce fiscal exposure before any cash payoutUncertainty in amount or timing does not prevent recognition when criteria are metA concentrated maturity can expose the government to rollover pressureA fiscal exposure can matter to users even when it is unrecognized

17. A state guarantees a utility loan whose borrower has weakened. Which conclusion is best supported?Uncertainty in amount or timing does not prevent recognition when criteria are metA guarantee can produce fiscal exposure before any cash payoutA fiscal exposure can matter to users even when it is unrecognizedDomestic-currency debt service can increase when the domestic currency weakens

18. A city has a present obligation with a probable outflow that can be reliably estimated and meets applicable recognition criteria. Which conclusion is best supported?Uncertainty in amount or timing does not prevent recognition when criteria are metA concentrated maturity can expose the government to rollover pressureA fiscal exposure can matter to users even when it is unrecognizedDomestic-currency debt service can increase when the domestic currency weakens

19. A ministry faces a lawsuit with possible outflow that is not remote but does not qualify for recognition. Which conclusion is best supported?A concentrated maturity can expose the government to rollover pressureA guarantee can produce fiscal exposure before any cash payoutDomestic-currency debt service can increase when the domestic currency weakensA fiscal exposure can matter to users even when it is unrecognized

20. Much of the government’s debt is denominated in foreign currency. Which conclusion is best supported?A concentrated maturity can expose the government to rollover pressureA guarantee can produce fiscal exposure before any cash payoutDomestic-currency debt service can increase when the domestic currency weakensUncertainty in amount or timing does not prevent recognition when criteria are met

21. A government must refinance a large bond issue next quarter. Which shortcut would most directly undermine the work?Monitoring debt principal alone and ignoring when it falls dueWaiting for final settlement before recording every obligationOmitting every risk that is absent from the balance sheetComparing foreign-currency face amounts without translation

22. A state guarantees a utility loan whose borrower has weakened. Which shortcut would most directly undermine the work?Monitoring debt principal alone and ignoring when it falls dueOmitting every risk that is absent from the balance sheetComparing foreign-currency face amounts without translationIgnoring guarantees until cash is paid

23. A city has a present obligation with a probable outflow that can be reliably estimated and meets applicable recognition criteria. Which shortcut would most directly undermine the work?Monitoring debt principal alone and ignoring when it falls dueIgnoring guarantees until cash is paidWaiting for final settlement before recording every obligationComparing foreign-currency face amounts without translation

24. A ministry faces a lawsuit with possible outflow that is not remote but does not qualify for recognition. Which shortcut would most directly undermine the work?Monitoring debt principal alone and ignoring when it falls dueOmitting every risk that is absent from the balance sheetIgnoring guarantees until cash is paidWaiting for final settlement before recording every obligation

25. Much of the government’s debt is denominated in foreign currency. Which shortcut would most directly undermine the work?Comparing foreign-currency face amounts without translationIgnoring guarantees until cash is paidWaiting for final settlement before recording every obligationOmitting every risk that is absent from the balance sheet

Show the answer key

Refinancing risk A concentrated maturity can expose the government to rollover pressure.
Guarantee exposure A guarantee can produce fiscal exposure before any cash payout.
Provision Uncertainty in amount or timing does not prevent recognition when criteria are met.
Contingent liability disclosure A fiscal exposure can matter to users even when it is unrecognized.
Exchange rate exposure Domestic-currency debt service can increase when the domestic currency weakens.
Map maturities against available financing and stress-test borrowing conditions A concentrated maturity can expose the government to rollover pressure.
Assess applicable measurement and disclosure requirements and monitor borrower performance A guarantee can produce fiscal exposure before any cash payout.
Recognize and measure the provision under the applicable standard Uncertainty in amount or timing does not prevent recognition when criteria are met.
Evaluate and make the required note disclosures A fiscal exposure can matter to users even when it is unrecognized.
Assess how currency shocks affect debt amounts and service costs Domestic-currency debt service can increase when the domestic currency weakens.
Debt maturity schedule and funding scenarios Map maturities against available financing and stress-test borrowing conditions.
Guarantee terms, financial statements and default indicators Assess applicable measurement and disclosure requirements and monitor borrower performance.
Legal assessment and documented measurement estimate Recognize and measure the provision under the applicable standard.
Counsel’s assessment and applicable disclosure criteria Evaluate and make the required note disclosures.
Currency breakdown and exchange-rate sensitivity analysis Assess how currency shocks affect debt amounts and service costs.
A concentrated maturity can expose the government to rollover pressure Debt maturity schedule and funding scenarios can support that assessment.
A guarantee can produce fiscal exposure before any cash payout Guarantee terms, financial statements and default indicators can support that assessment.
Uncertainty in amount or timing does not prevent recognition when criteria are met Legal assessment and documented measurement estimate can support that assessment.
A fiscal exposure can matter to users even when it is unrecognized Counsel’s assessment and applicable disclosure criteria can support that assessment.
Domestic-currency debt service can increase when the domestic currency weakens Currency breakdown and exchange-rate sensitivity analysis can support that assessment.
Monitoring debt principal alone and ignoring when it falls due A concentrated maturity can expose the government to rollover pressure.
Ignoring guarantees until cash is paid A guarantee can produce fiscal exposure before any cash payout.
Waiting for final settlement before recording every obligation Uncertainty in amount or timing does not prevent recognition when criteria are met.
Omitting every risk that is absent from the balance sheet A fiscal exposure can matter to users even when it is unrecognized.
Comparing foreign-currency face amounts without translation Domestic-currency debt service can increase when the domestic currency weakens.

These are hypothetical examples. Local reporting frameworks and budget rules vary. IPSASB standards and pronouncements

Public Debt and Fiscal Risks Quiz

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