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

Capital projects funds use the financial resources measurement focus and accrual basis of accounting.

When using debt service accounting, interest on long term debt is not to be accrued unless the payment is due in no more than one month and the government has resources available for payment.

Permanent funds may spend both earnings and principal.

When taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized:

Because debt service and permanent funds use modified accrual accounting, these funds would typically record encumbrances.

The principal of permanent funds must be classified as Restricted Fund Balance.

Which of the following is correct regarding Government Trust Accounting?

What is a bond refunding and why do governments refund bonds?

If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenues of the debt service fund.

Proceeds of tax supported bonds are recognized in a capital projects fund as aan:

Investments of permanent funds should be reported at fair value, if determinable, and unrealized gains reported along with realized gains as "Investment Income-Net Increase in Fair Value of Investments."

The current and long-term portions of General Long-term Debt are normally reported in a debt service fund.

Taxes or other revenues raised specifically for a capital project are recorded as transfers in in the capital projects fund.

Which of the following statements is false?

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. -How would the government account for the transfer of the unused bond proceeds?

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. -How would the bond sale be recorded?

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Committed Fund Balance

Write yes or no in each box to indicate whether each property applies to the following funds: Fund\nobreakspaceName Modified\nobreakspaceAccural\nobreakspaceBasis Fiancial\nobreakspaceResource\nobreakspaceForce Record\nobreakspaceBudgets Use\nobreakspaceEncumbrances Indefinite\nobreakspaceLife General\nobreakspaceFund Special\nobreakspaceRevenue Capital\nobreakspaceProjects Debt\nobreakspaceService Permanent

The residual classification for governmental fund balances other than the General Fund is Assigned.

An encumbrance in a capital project fund is created