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

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 liability for general obligation bonds should be recorded in the

If all financial resources recognized as assets and as revenues of a debt service fund have not been collected in cash and/or have not been disbursed for payment of debt service as of the end of a fiscal year it is necessary that a debt service fund balance sheet be prepared for inclusion in a government's annual report.

On the due date for bond interest,the debt service fund journal entry (or entries)will include a debit to

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 assets in the Business-type Activities column.

What provision in a bond indenture or bond ordinance is necessary for long-term debt to be classified as a general obligation? Are all obligations properly reported as general long-term debt evidenced by bonds or notes? If not,give several examples of general long-term debt not evidenced by bonds or notes.

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

Taxes for debt service are always levied by the General Fund and transferred to a debt service fund.

The city of Superior's fiscal year ends on December 31.On July 1,2011 Superior issues $1,000,000 of 8%,10-year term bonds with semi-annual interest payments due on July 1 and January 1 each year.The General Fund transferred $100,000 to the debt service fund on July 1,2011 to pay for interest to bondholders for the year.The debt service fund invests the money at an annual rate of 10%.What is the amount of total assets in the debt service fund at the end of 2011?

If a government issues debt to finance capital acquisition by another government and the proceeds of the debt are a short time later delivered to the intended beneficiary government,how is the related long-term debt reflected in a governmental fund of the issuing government?

The liability for matured bonds payable should be recorded by a debt service fund only if a legal appropriation for that purpose exists in the proper amount.

On the due date for bond interest,the debt service fund journal entry (or entries)will include

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 is true for debt service funds?

Budgetary accounting for regular serial bond debt service funds differs somewhat from that for deferred serial bond or term bond debt service funds.Explain these differences.

Debt service funds exist to accumulate resources to pay tax supported bond issues at maturity.Interest on such bonds is paid from General Fund appropriations rather than from debt service fund appropriations.

Expenditures for interest on tax supported long-term debt are accrued in debt service funds.

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

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?

Which of the following debt service funds would normally have the largest balance in its Fund Balance account?