Exam 6: Accounting for General Long-Term Liabilities and Debt Service

Both general capital assets acquired or constructed from the proceeds of special assessment debt and the related long-term liability are recorded in the governmental fund.

Special assessment debt is not recorded in a government's accounts.

Which of the following statements is always true concerning the reporting of debt service funds?

If a debt service fund is used,capital lease payments for general capital assets should be recorded by a debt service fund rather than the fund using the leased asset.

Which of the following is a true statement regarding in-substance defeasance of bonds?

Explain the essential differences between regular serial bonds and term bonds and how debt service fund accounting differs for the two types of bonds.

The following key terms from Chapter 6 relate to accounting for general long-term liabilities and debt service: A.Legal defeasance B.Regular serial bonds C.In-substance defeasance D.Irregular serial bonds E.Debt limit F.Annuity serial bonds G.Debt margin For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.

Since the debt of a government is subject to a legal debt limit,there cannot be any legal overlapping debt.

Premiums received on tax-supported bonds are generally transferred to what fund?

Notes to the financial statements of a state or local government should include a schedule,or summary,of debt service requirements (principal and interest payments)until the final maturity of debt outstanding on the balance sheet date.

In the current fiscal year,Casper County issued $10,000,000 in general obligation term bonds at 102 for construction of a new county complex.The county is required to use any accrued interest or premiums for servicing the debt issue. a.Prepare journal entries to record the bond issuance at the fund and government-wide levels? b.How would the bond issue be reported in the fund financial statements and the government-wide financial statements? c.What effect,if any,do interest payments have on the carrying value of the bond issue as reported in the financial statements?

A debt service fund is a

When bonds are sold at a premium for a capital project,the premium amount generally

The liability for special assessment bonds that carry a secondary pledge of a city's general credit,if reported in conformity with GAAP,should be reported in the balance sheet(s)of

Issuance of tax-supported debt having a maturity of more than one year from date of issue results in a journal entry in only the governmental activities general journal.

Which of the following basic financial statements contains a column for the total of all debt service funds?

Which of the following is not properly recorded in the governmental activities accounts?

Which of the following statements is not true for debt service funds?

While governmental fund liabilities and expenditures for debt service on general long-term debt are generally recognized in the reporting period that debt payments are due to correspond with appropriations,if a government has deposited or transferred financial resources dedicated for payment of debt service to the debt service fund and payment of principal and interest is due early in the following year,then the expenditure and related liability may be recognized in the debt service fund prior to year end.

"Bonds to be retired by a debt service fund are recorded in that fund throughout their life." Do you agree or disagree? Why or why not?