In the Debt Service Fund, What Is the Appropriate Entry

question 5

Multiple Choice

In the debt service fund, what is the appropriate entry when the principal payment is made?

• A)Debit Bonds payable; Credit Cash.
• B)Debit Expenditures; Credit Cash.
• C)Debit Other financing uses-nonreciprocal transfer-out; Credit Cash.
• D)No entry is required.
• Use the following information to answer questions 28 - 29.
• The citizens of a specific area of the City of Arlington approved the construction of sidewalks in their residential neighborhood and approved a $1 million bond issue to finance construction of those sidewalks.The citizens agreed to assess themselves for 20 years in an amount sufficient to pay principal and interest on the bonds.The city will oversee the construction of the sidewalks and act as agent for servicing the debt.The city does not guarantee the debt nor does it assume any legal or moral obligation for the bonds.

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Definitions:

Acquisition Differential

The difference between the cost of acquiring a company and the fair value of its identifiable net assets at the time of acquisition, essentially another term for goodwill.

Trademarks

Symbols, names, phrases, or logos legally registered or established by use as representing a company or product.

Unrealized Inventory Profits

Profits that have been recorded on paper due to an increase in inventory value but have not been realized through sales.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, without having control over those policies.