To Offset Engineering and Design Costs Incurred Prior to the Issuance

question 19

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 above. Debt is not recorded in governmental funds.

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Definitions:

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, usually aimed at ensuring fairness by taxing higher incomes at higher rates.

Average Tax Rate

The fraction of total income that is paid in taxes, calculated by dividing the total tax amount by the total income.

Dollar Tax Liability

The amount of tax owed to the government, calculated in dollars, based on income, sales, imports, or other taxable activities.

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, placing a larger burden on those who have higher earnings.