Final answer:
Special assessment bonds that carry a secondary pledge of a city's general credit should be reported as a liability on the government's balance sheet because they represent a future obligation to pay.
Step-by-step explanation:
The question asks where the liability for special assessment bonds with a secondary pledge of a city's general credit should be reported on a balance sheet. When a city issues special assessment bonds, the primary source of repayment is usually the assessments on the properties that benefit from the project that the bonds fund. However, if there is a secondary pledge of the city's general credit, this implies there is an additional layer of security for bondholders.
These bonds are considered a liability for the city because they represent a future obligation to pay. Since the bonds have a secondary pledge of the city's general credit, they would be recorded on the liability side of the government's balance sheet, reflecting the city's obligation to pay if the primary source of revenue is insufficient.