M5 - Governmental Funds Financial Statements: Part 1 Flashcards
The debt service fund accounts for the accumulation of resources for, and the payment of, general long-term debt principal and interest. (true or false)
True
Ex: A special tax levy exclusively restricted for debt repayment would be most appropriately accounted for in a debt service fund.
The general fund is a governmental fund. When interest is paid using a governmental fund, interest expenditures is increased and cash is decreased. (true or false)
True
The interest expenditure decreases fund balance on the general fund balance sheet, just as interest expense decreases the retained earnings of a commercial enterprise.
Under the modified accrual basis of accounting, expenditures are generally recognized when incurred because that is when they become measurable. An exception to this general rule is the treatment of interest and principal payments for long term debt. What is the exception?
Interest and principal on long-term debt are recorded when they become due and payable, not when they accrue.
What would $2,000,000 to create a non-expendable trust (e.g. an inmate/jail commissary) be recorded in?
Private purpose trust fund
What would $6,000,000 for acquisition of major capital facilities be recorded in?
Capital Projects fund
Gasoline taxes to finance road repairs would be recorded in?
Special revenue funds
Revenues that are legally restricted to expenditures for specified purposes should be accounted for in the special revenue funds.
$500,000 Levies on affected property owners to install sidewalks should be recorded in?
The $500,000 in levies (special assessments) on affected property owners to install sidewalks, a capital addition, would be accounted for in a capital projects fund.
Receipts from a special tax levy to retire and pay interest on general obligation bonds should be recorded in which fund?
Debt service fund
