Chapter 6 Flashcards
Bonds for which the amount of annual principal repayments is scheduled to increase each year by approximately the same amount that interest payments decrease.
Annuity Serial Bonds
Potential liabilities, including lawsuits or demands for payment of damages related to the occurrence of an event, such as the destruction or damage of property and related injuries.
Claims and Judgments
Leaves of absence for which employees earn the right to be paid, such as vacation or sick leave.
Compensated absences
The maximum amount of gross or net debt that is legally permitted.
Debt Limit
The difference between the amount of the debt limit (q.v.) and the net amount of outstanding indebtedness subject to the limitation.
Debt Margin
Serial bonds (q.v.) in which the first installment does not fall due for two or more years from the date of issue.
Deferred Serial Bonds
Debt that has terms negotiated directly with the investor or lender and is not offered public sale. In a direct borrowing, a government engages in a loan with a lender for funding (e.g., bank, credit union, private mortgage company, etc.); in a direct placement, a government issues a debt security directly to an investor.
Direct borrowings or placement of debt
Long term debt legally payable from general revenues and backed by the full faith and credit of a governmental entity.
General Long Term Liabilities
Bonds payable in which the total principal is repayable, but the repayment plan does not fit the definitions of regular serial bonds, deferred serial bonds, or term bonds.
Irregular Serial Bonds
A transaction in which debt is legally satisfied based on certain provisions in the debt instrument (e.g., third party guarantor assumes the debt) even though the debt has not been repaid.
Legal Defeasance
The proportionate share of the debts of local governments located wholly or in part within the limits of the government reporting entity that must be borne by property within each government. Note: Except for special assessment debt, the amount of debt of each unit applicable to the reporting unit is arrived at by (1) determining what percentage of the total assessed value of the overlapping jurisdiction lies within the limits of the reporting unit and (2) applying this percentage to the total debt of the overlapping jurisdiction. Special assessment debt is allocated on the basis of the ratio of assessments receivable in each jurisdiction that will be used wholly or in part to pay off the debt to total assessments receivable that will be used wholly or in part for this purpose.
Overlapping Debt
Obligations that arise from responsibilities related to the cleanup of hazardous waste resulting from existing pollution.
Pollution Remediation Obligations
Bonds issued to retire bonds already outstanding. The refunding bonds may be sold for cash and outstanding bonds redeemed in cash, or the refunding bonds may be exchanged with holders of outstanding bonds.
Refunding Bonds
Bonds payable in which the total principal is repayable in a specified number of equal annual installments.
Regular Serial Bonds
Funds used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt service funds should be used to report resources if legally mandated. Financial resources that are being accumulated for principal and interest maturing in future years also should be reported in debt service funds.
Sinking Fund
