A State Issues Long-Term Debt to Finance a Major Construction

question 23

Multiple Choice

A state issues long-term debt to finance a major construction project.The first installment of debt service requires payment of principal of $75,000 and interest of $100,000.Which of the following statements is true on the day that payment for principal and interest is legally due?

• A)expenditures of $175,000 should be recognized in the debt service fund.
• B)expenditures of $75,000 should be recognized in the capital projects fund and expenditures of $100,000 should be recognized in the debt service fund.
• C)expenditures of $100,000 should be recognized in the debt service fund and bonds payable should be reduced by $75,000 in the debt service fund.
• D)expenditures of $175,000 should be recognized in the debt service fund and bonds payable should be reduced by $75,000 in the capital projects fund.

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Definitions:

Sometimes-Opponent-Process Theory

A theory suggesting that emotional and behavioral reactions adjust to opposite states from those initially induced by a stimulus over time.

Conditioned Stimulus

An initially neutral stimulus that, after being linked with an unconditioned stimulus, starts to produce a conditioned response.

Conditioned Response

A conditioned response is an automatic reaction established by learning to an initially neutral stimulus after being repeatedly paired with an unconditioned stimulus that triggers an automatic response.

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without prior learning or conditioning.