To Offset Engineering and Design Costs Incurred Prior to the Issuance

question 54

Multiple Choice

To offset engineering and design costs incurred prior to the issuance of a long-term bond issue, a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National Bank. This transaction should be recorded in:

• A) The capital projects fund.
• B) The debt service fund.
• C) The special revenue fund.
• D) None of the options are correct. Debt is not recorded in governmental funds.

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Definitions:

Journal Entries

The recording of financial transactions and events in the books of accounts, in chronological order, detailing the financial effects of business transactions and events.

Payroll Tax Expense

Taxes that are levied on an employer based on the wages and salaries paid to employees.

FICA-OASDI

Refers to the Social Security portion of the Federal Insurance Contributions Act tax, funding Social Security retirement, disability, and survivor benefits.

FICA-OASDI

The Federal Insurance Contributions Act tax for Old-Age, Survivors, and Disability Insurance, which funds Social Security.