If Taxes Are Levied Specifically for Payment of Interest and Principal

question 111

Multiple Choice

If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are:

• A) Included as a liability of the general fund
• B) Recorded as operating transfers to the debt service fund
• C) Included as revenues of the debt service fund
• D) Both A and B are correct

---

Definitions:

Business Operations

Activities involved in the day-to-day functions of a business related to producing and delivering products or services.

Unlimited Liability

A legal structure in which owners are personally and fully responsible for all debts and liabilities incurred by the business.

Personal Assets

Assets owned by an individual as opposed to those owned by businesses or governments, including tangible and intangible items.

Original Capital Investment

The initial sum of money used to start a business or investment, often used for assets, inventory, and other startup costs.