Question

The General Fund has transferred cash to the appropriate fund for eventual retirement of term bonds maturing in 10 years. Which funds would record this transaction?

General Fund Capital Projects Fund Debt Service Fund
A) Yes No Yes
B) No No Yes
C) Yes No No
D) Yes Yes Yes

Answer 1

The transaction for transferring cash for the eventual retirement of bonds is recorded in the General Fund and the Debt Service Fund, but not the Capital Projects Fund. Option A (Yes, No, Yes) is the correct combination of recordings for these funds.

Step-by-step explanation:

The General Fund has transferred cash to the appropriate fund for the eventual retirement of term bonds maturing in 10 years. The funds that would record this transaction are the General Fund and the Debt Service Fund but not the Capital Projects Fund. Therefore, the correct answer to which funds would record this transaction is: General Fund - Yes, Capital Projects Fund - No, Debt Service Fund - Yes (Option A).

When the General Fund transfers cash for the retirement of bonds, the Debt Service Fund is used to account for financial resources set aside for paying the interest and principal on long-term debt. The Capital Projects Fund is utilized for the money used on major capital projects, not for servicing debt.