Question

Which of the following statements is correct with respect to general long-term debt.

A. Long term debt is recorded in the individual funds, but not the government-wide statements.
B. General long term debt included the noncurrent portion of capital lease arrangements, compensated absences and net pension obligation but not the principal portion of unmatured bonds.
C. Required disclosures for the government-wide statements include the Schedule of Changes in Long-term Debt and Schedule of Debt Service Requirements are required disclosures in the government-wide statements.
D.. Since interest is accrued in the Debt Service Fund, no additional accrual is necessary when converting to the government-wide basis.

Answer 1

The correct statement regarding general long-term debt in governmental accounting is that it includes various noncurrent liabilities and the principal on bonds, and it must be disclosed in government-wide financial statements with required schedules. Accrued interest must also be considered when converting to government-wide financial statements.

Step-by-step explanation:

The correct statement with respect to general long-term debt for governments is that general long-term debt includes the noncurrent portions of capital lease obligations, compensated absences, and net pension obligations, as well as the principal portion of unmatured bonds. However, the correct recording and disclosure practices for general long-term debt in government accounting are that long-term debt is not recorded in individual funds but reported in the government-wide financial statements. Additionally, the government-wide statements require disclosures including the Schedule of Changes in Long-term Debt and Schedule of Debt Service Requirements.

When converting to the government-wide basis, interest on long-term debt is accrued regardless of whether it has been recorded in the Debt Service Fund, so statement D would be incorrect because an additional accrual may be necessary.