Nathan Township Financed Emergency Repairs on the Township Hall by Borrowing

question 15

Multiple Choice

Nathan Township financed emergency repairs on the Township Hall by borrowing on a $200,000, 6 month short-term note. The interest rate on the note was 6% and it was issued 2 months prior to the end of the fiscal year. Which of the following statements accurately reflects how the General Fund will be affected in the year the financing was acquired?

• A) The General Fund will report an other financing source of $200,000.
• B) The General Fund will report a Note Payable of $200,000.
• C) The General Fund will report interest expenditures of $12,000.
• D) The General Fund will report interest expense of $2,000.

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