Question 1

A city government levies a special property tax dedicated solely to the repayment of general obligation bonds issued to finance the construction of a new city hall. In which fund should the proceeds from this tax be recorded?

Accepted Answer

Identify the purpose of the resource. If it is for principal and interest payments on general long-term debt, it belongs in the Debt Service Fund.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Confusing the fund for construction (Capital Projects) with the fund for repayment (Debt Service); using Special Revenue for debt service restricted funds.

A city government levies a special property tax dedicated solely to the repayment of general obligation bonds issued to finance the construction of a new city hall. In which fund should the proceeds from this tax be recorded?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA FAR Practice Exam 4

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