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

When the debt service fund makes a payment of principal and interest on an outstanding long-term debt,the governmental activities accounts

Expenditures for capital lease payments consist of two elements: payment of interest on the lease obligation,and payment on the obligation itself.

Which of the following is true for debt service funds?

Interest expenditures on bonds payable should be recorded in a debt service fund

Compute the legal debt margin for Mountain City given the following information regarding its bonded debt. 1)The legal debt limit is 10 percent of total assessed valuation. 2)Bonds outstanding and bonds authorized are: Note: The city has no general obligation liability for the revenue bonds or the industrial development bonds. 3)Total assessed valuation of property within Mountain City is $200,000,000.

The issuance of general long-term bonds requires recognition by the fund receiving the proceeds and by the business-type activities.

Which of the following debt service fund accounts would not be closed at the end of each fiscal year?

Pollution remediation obligations should be recognized if which of the following obligating events has occurred?

Bonds and other debt of enterprise funds may legally,at least contingently,have the status of tax-supported debt.In the event that enterprise fund resources are insufficient for debt service on such debt,why might the government as a whole find it necessary or desirable to assume responsibility for debt service? How would assumption of responsibility for such debt by the government as a whole be accounted for in the governmental activities accounts in the enterprise fund?

Debt backed by both special assessments and the full faith and credit of a government should be reported in the government-wide statement of net position in the Business-type Activities column.

General long-term liabilities are those that arise from the activities of a government.

Which of the following assets would not be found in the balance sheet of a debt service fund?

At year-end,budgetary and operating statement accounts of a debt service fund are closed in the same manner as are those of a General Fund or special revenue funds.

If general capital assets are being acquired by a government under a capital lease agreement,describe the entries that should be recorded in a governmental fund (logically,a debt service fund)for each lease payment.

The premium or discount on bonds purchased as investments is accounted for in the same manner as a premium or discount on bonds sold (i.e.,bond payable).

Which of the following budgetary accounts is typically used by a debt service fund?

"The entire debt arising from the acquisition of general capital assets under a capital lease agreement should be reported as debt of the fund that accounts for the activities of the department or function using the leased asset.Only debt arising from the lease of equipment used by a number of departments should be reported in the governmental activities accounts,rather than a fund." Do you agree? Why or why not?

Typically,proceeds from general obligation bonds will be recorded in the

All long-term debt,including bonds,notes or warrants,and various other long-term obligations,intended to be repaid from tax levies or special assessments are accounted for in debt service funds.

In many jurisdictions,the statutory debt limit is relatively low,but overlapping debt is not prohibited.From the standpoint of the property owner and taxpayer,how does that situation compare with a relatively high total statutory debt limit?