The citizens of a specific area of the City of Arlington approved the construction of sidewalks in their residential neighborhood and approved a $1 million bond issue to finance construction of those sidewalks. The citizens agreed to a special assessment on their property for 20 years in an amount sufficient to pay principal and interest on the bonds. The city will oversee the construction of the sidewalks and act as agent for servicing the debt. If the special assessment is not sufficient to make the principal and interest payments, the city will assume the obligations.
-The proceeds of the bond issue should be recorded in which fund of the City of Arlington?
A) Agency fund.
B) Special assessment fund.
C) Capital projects fund.
D) Debt service fund.

Question

The citizens of a specific area of the City of Arlington approved the construction of sidewalks in their residential neighborhood and approved a $1 million bond issue to finance construction of those sidewalks.  The citizens agreed to a special assessment on their property for 20 years in an amount sufficient to pay principal and interest on the bonds.  The city will oversee the construction of the sidewalks and act as agent for servicing the debt.  If the special assessment is not sufficient to make the principal and interest payments, the city will assume the obligations.  
-The proceeds of the bond issue should be recorded in which fund of the City of Arlington?
A) Agency fund.
B) Special assessment fund.
C) Capital projects fund.
D) Debt service fund.

Quizplus · Accepted Answer

The proceeds from the bond issue for the construction of sidewalks should be recorded in a Capital Projects Fund, as this fund is used for financial resources to be used for the acquisition or construction of major capital facilities.

The Citizens of a Specific Area of the City of Arlington