Governmental funds FS

Question 1

What is general rule when account for expenditures?

Answer 1

Almost everything will be recorded as expenditures when they are paid or become measurable

Question 2

what is the exception to the general rule of recording expenditure?

Answer 2

Long term debt principal and interest can be recorded when the debt becomes due and payable, not when they matured

Question 3

what fund should be classified when a government issue long term debt to finance a major construction project?

Answer 3

• The proceeds from financing to build a construction project would be capital project fund
• Debt service fund will be affected when interest and principal payment become due

Question 4

what is the treatment of bond premium/discount under governmental funds?

Answer 4

• par value is displayed as bond proceeds (sources)
• bond premium/discount is displayed separately as financing source
• other bond issue costs are displayed as expenditures
• NO amortization of premium/discount

Question 5

what is bond anticipation notes?

Answer 5

• governmental entities issue bond anticipation notes has the ability and intent to refinance bonds
• when entities are able to refinance, the debt is classified as current obligation on fund FS

Question 6

what is permanent fund?

Answer 6

permanent fund is used to account for principal that is restricted and may not be expended. Earnings may be used for purposes that benefits the public