Exam 6: Accounting for Capital Projects and Debt Service

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.

The resources to service all general long-term debt of governments are typically accounted for in debt service funds.

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

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

In the debt service fund, what is the appropriate entry when the principal payment is made?

Salt City issued $5 billion of bonds at face value to fund the reconstruction of major interstate highways in and around the city.The bond underwriters withheld $2 million for underwriting fees and remitted the balance to the city.Assuming the city maintains its books and records in a manner that facilitates the preparation of fund financial statements, how should the underwriting fee be recorded in the capital projects fund?

In the debt service fund

In the capital projects fund

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

In which fund type would a government's capital projects fund be found?

When bonds are issued at a premium, the capital projects fund can transfer those excess resources to the debt service fund.

Debt service funds are maintained to account for resources accumulated to pay interest and principal on general long-term debt-that is, long-term debt associated primarily with governmental activities.

When the City of Arlington levies the special assessment tax, the best entry would be

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.

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

When the county makes the transfer the entry in the debt service fund should be

When governments establish capital projects funds, they may choose to maintain a separate fund for each major project, or they may choose to combine two or more projects in a single fund.

Use of a debt service fund is required.

With regard to the resources dedicated to the acquisition of capital assets that will be used in general government activities, which of the following is true?

Proceeds of debt issued to finance a capital project should be reported in a capital projects fund as a liability until the project is completed.