Question

Proceeds from the issuance of bonds or other long term debt for a governmental fund (not proprietary fund) would be considered what type of account (i.e. which account would be credited when the cash is received)?

a.Long term liability
b.revenue
c.other financing sources
d.no entry would be made in a governmental fund

Answer 1

Governmental fund proceeds from the issuance of bonds or other long-term debt are recorded as 'other financing sources' and not as revenues or long-term liabilities.

Step-by-step explanation:

When a governmental fund (not a proprietary fund) issues bonds or takes on long-term debt, the proceeds are recorded as other financing sources. This is because, in governmental fund financial statements, debt proceeds are not considered revenues since they do not arise from the entity's primary operations but are instead from financing activities. Therefore, upon the receipt of cash from the issuance of bonds, an account credited would not be treated as a long-term liability or revenue; rather, it would be recorded as an other financing source.