When Using Debt Service Accounting, Interest on Long Term Debt

question 102

True/False

When using debt service accounting, interest on long term debt is not to be accrued unless the payment is due in no more than one month and the government has resources available for payment.

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Definitions:

Depreciation

The reduction in value of tangible assets over time due to use and wear and tear.

Equipment

Durable goods used in operations, such as machinery and office hardware.

Equipment Purchase

The acquisition of physical assets such as machinery or office equipment that a business uses in its operating activities.

Cash

Money in the form of physical currency or balances held in bank accounts, considered the most liquid form of assets.