When Taxes Are Levied Specifically for Payment of Interest and Principal

question 104

Multiple Choice

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

• A) As revenues in the General Fund with transfers made to the debt service funds for payments.
• B) As Other Financing Sources in the debt service fund.
• C) As revenues in the capital projects fund with transfers made to the debt service funds for payments.
• D) As revenues in the debt service fund.

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Definitions:

Absorption Costing

A bookkeeping approach that encompasses all costs associated with production, including direct materials, direct labor, along with both variable and fixed overhead expenses, into the product's cost.

Product Cost

The total expense incurred to produce and prepare a product for sale, including direct materials, labor, and overhead.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Absorption Costing

A cost accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.