If a Governmental Fund Issues Debt to Finance a Capital

question 41

Multiple Choice

If a governmental fund issues debt to finance a capital acquisition, how should the proceeds of the debt be recorded?

• A) Long-term liability.
• B) Revenue.
• C) Other financing source.
• D) Not reported by the governmental fund; only reported at the government-wide level.

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Definitions:

Debt Restructuring

The process by which terms of an existing debt are modified, often involving the reduction of the debt and/or extension of payment terms.

Common Stock

Represents equity ownership in a corporation, providing holders with voting rights and a share in the company's profits through dividends.

Note Payable

A written agreement to pay a certain sum of money, typically with interest, at a future date.

IFRS

A global framework for financial reporting, International Financial Reporting Standards are accounting standards established by the International Accounting Standards Board (IASB).