The GASB Codification sets forth circumstances in which a state or local governm

Question

The GASB Codification sets forth circumstances in which a state or local government is permitted to accrue expenditures related to unmatured principal and interest on general obligation long-term liabilities. Which of the following are those circumstances?

I.          Dedicated financial resources to pay the maturing principal and interest have been accumulated in a Debt Service Fund by year end.

II.        The debt service payment is due early next year (within 30 days).

III.       The debt service payment is due early next year (within 60 days).

A. I only.

B. I and II.

C. I and III.

D. II only.

Explanation / Answer

Option A. 1 Only.

General obligation indicates “full faith and credit” of the governmental unit pledged to repay the debt whereas Revenue debt indicates specific revenue source dedicated to repay the debt.

Revenue debt fund is created for this purpose.

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