Exam 5: Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

Debt service funds should accrue interest and report principle payments due within the next12 months following year end.

Grants, entitlements, or shared revenues received by a capital projects fund from another governmental unit are considered revenues of the capital projects fund, as is interest earned on temporary investments of the capital projects fund.

If bonds issued to fund a capital project are sold at a premium, the additional money received is:

With respect to Capital Projects Funds, which of the following is correct?

Bond refunding is repurchasing bonds from bondholders using residual money left over after a capital project has been completed.

Which of the following should be accounted for in a permanent fund?

When accounting for interest expenditures through debt service funds, interest is required to be accrued at year-end.

A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city war memorials should be accounted for in a special projects fund.

Budgets are typically recorded for Debt Service Funds.

The City of Presho had the following transactions related to the construction of a new courthouse. a) 1/2/2017: 20 year 4% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 102. Interest and principle payments are made on Jan. 1 and July 1 of each year. The premium was transferred into the Debt Service Fund. The General Fund will fully fund each payment as they become due. b) 3/1/2017: Land is purchased for a new courthouse at a cost of $ 300,000. c) 3/1/2017: A contract is signed for construction of the new courthouse in the amount of $ 4,300,000. d) 6/15/2017: Cash $ 225,000sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund. e) 7/1/2017: Interest $100,000 and principal $125,000) are paid on the courthouse fund serial bonds. f) 12/1/2017: Receive an invoice for progress completed to date on the courthouse construction project in the amount of $3,700,000. g) 12/27/2017: $97,500 is transferred from the General Fund for the 1/1/2017 interest payment due on the courthouse fund serial bonds. Interest is accrued as of 12/31/2017, following the exception permitted by GASB. Required: Prepare a Statement of Revenues, Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds. Assume this is the first year for each fund beginning fund balances are zero and the City has no other long-term debt than that described above. Use separate columns for the two funds

Which of the following statements is false?

The following are sources of funds for the debt service fund except:

With respect to Debt Service Funds, which of the following is incorrect?

Which of the following statements is false?

Which of the following funds should be used if resources are provided by a donor with the stipulation that they be used for the benefit of the citizenry?

During the fiscal year ended December 31, 2017, the City of Johnstown issued 6% general obligation serial bonds in the amount of $2,000,000 at 102 $2,040,000) and used $1,980,000 of the proceeds to construct a fire station. The $40,000 premium was transferred to a debt service fund. The $20,000 left in the capital projects fund at the end of the project was later transferred to the debt service fund. The bonds were dated April 1, 2017 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2018. -The amount of capital outlay expenditures reported by the capital projects fund would be:

Capital project funds have indefinite lives.

Debt service funds are used to account for financial resources that are intended to provide payments of principal only as they come due.

Which of the following is not correct with respect to the General Fund?

Encumbrance accounting is typically not used for Permanent Funds.