TRUE OR FALSE 12. Compensated absences, such as vacation pay and sick leave, sho
ID: 2480632 • Letter: T
Question
TRUE OR FALSE
12. Compensated absences, such as vacation pay and sick leave, should be accounted for on the accrual basis in governmental funds.
13. A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.
14. Proceeds of debt intended to finance general capital assets should be reported in the fund financial statements as a fund liability.
15. Prepaid expenses such as for insurance are classified as deferred outflows, rather than as assets.
16. Use of the consumption method of accounting for inventory is not acceptable for the fund financial statements.
13 . In the statement of revenues, expenditures, and changes in fund balance of a debt service fund, the fund balance amount should be reported as restricted for debt service.
14. Governments should account for special assessment debt service transactions in a debt service fund, even if they are not obligated to pay the debt.
15. Arbitrage is the process of negotiating resolution of conflicts between the federal government and municipalities over the applicability of federal regulations.
16. Sound fiscal policy dictates that the maturity of debt should be no longer than the life of the assets it is used to finance.
17. Proceeds of debt issued to finance a capital project should be reported in a capital projects fund as a liability until the project is completed.
18. Special assessment debt to be paid from a water utility fund should be accounted for in that fund along with the related capital improvements.
Explanation / Answer
12. Compensated absences, such as vacation pay and sick leave, should be accounted for on the accrual basis in governmental funds. TRUE
13. A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.TRUE
14. Proceeds of debt intended to finance general capital assets should be reported in the fund financial statements as a fund liability.TRUE
15. Prepaid expenses such as for insurance are classified as deferred outflows, rather than as assets.TRUE
16. Use of the consumption method of accounting for inventory is not acceptable for the fund financial statements.FALSE
In the statement of revenues, expenditures, and changes in fund balance of a debt service fund, the fund balance amount should be reported as restricted for debt service.FALSE
14. Governments should account for special assessment debt service transactions in a debt service fund, even if they are not obligated to pay the debt.FALSE
Arbitrage is the process of negotiating resolution of conflicts between the federal government and municipalities over the applicability of federal regulations -TRUE
16. Sound fiscal policy dictates that the maturity of debt should be no longer than the life of the assets it is used to financeTRUE
17. Proceeds of debt issued to finance a capital project should be reported in a capital projects fund as a liability until the project is completed.FALSE
18. Special assessment debt to be paid from a water utility fund should be accounted for in that fund along with the related capital improvements.TRUE
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