Question

Which of the following activities would use a debt service fund to account for the accumulation of resources for and the payment of interest and principal on long-term debt?

FIDUCIARY FUNDS PROPRIETARY FUNDS
a. Yes No
b. No Yes
c. Yes Yes
d. No No

Answer 1

A debt service fund is used to account for the accumulation of resources for and the payment of interest and principal on long-term debt. It is typically used for government entities or organizations that have borrowed money through bonds or loans. The correct option is a. Yes No.

Step-by-step explanation:

A debt service fund is used to account for the accumulation of resources for and the payment of interest and principal on long-term debt. This fund is typically used for government entities or organizations that have borrowed money through bonds or loans and need to set aside funds to repay the debt. Examples of activities that would use a debt service fund include:

• Making interest and principal payments on government bonds
• Setting aside funds for future debt payments
• Accounting for interest income received on invested debt proceeds

In the given options, the correct answer would be a. Yes No, as using a debt service fund would be required for the accumulation and payment of interest and principal on long-term debt.