Exam 6: Accounting for Capital Projects and Debt Service

Governments should account for special assessment debt service transactions in a debt service fund,even if they are not obligated to pay the debt.

Use of a debt service fund is required.

The entry in the capital projects fund to record the additional funding for the construction should be

In the debt service fund

Harbor City issued 6 percent tax-exempt bonds and used the proceeds to acquire federal government securities yielding 7 percent.After paying the interest on the tax-exempt bonds,the city cleared 1 percent.This is an example of

In contrast to the accounting for debt service fund expenditures,the interest revenue on bonds held as investments should be accrued in the period the revenue is earned.

Sister City was notified by the state that it has been awarded a $5 million grant to aid in the construction of a senior citizens center.At the time of the notification what is the appropriate entry in the capital projects fund? Assume that the city has met all eligibility requirements and maintains its books and records in a manner to facilitate the preparation of fund financial statements.

Cascade County issued $1 million of 6 percent term bonds at 101.These bonds will be used to finance the construction of highways.The entry in the debt service fund to record the receipt of cash should be

In the statement of revenues,expenditures,and changes in fund balance of a debt service fund,the fund balance amount should be reported as restricted for debt service.

Sound fiscal policy dictates that the maturity of debt should be no longer than the life of the assets it is used to finance.

The proceeds of the bond issue should be recorded in which fund of the City of Arlington?

When the city collects the special assessment,it should be accounted for in which fund of the City of Arlington?

In the capital projects fund

Sugar City issued $2 million of bonds to fund the construction of a new city office building.The bonds have a stated rate of interest of 5 percent and were sold at 101.Which of the following entries should be made in the capital projects fund to record this event?

Arbitrage is the process of negotiating resolution of conflicts between the federal government and municipalities over the applicability of federal regulations.

When the city collects the special assessment,it should be accounted for in which fund of the City of Arlington?

In which fund type would a government's debt service fund be found?

The entry in the capital projects fund to record the receipt of the bond proceeds should be

Special assessments are imposed nonexchange transactions,similar to property tax levies.

Adams County has outstanding $10 million in bonds issued to construct a sewer system in a specific area of the county.The taxpayers in that area voted for the construction and the bonds and agreed to assess themselves to pay the principal and interest on the bonds.The county contracted for the construction and issued the bonds but assumed no legal or moral obligation for the bonds.If the special assessment payments are not sufficient to make the required principal and interest payments,the county will not make up the difference.The liability for the $10 million of bonds should appear in which fund financial statements?