Citizens within a defined geographic area of Dolan City created a special assessment district to facilitate the construction of sidewalks. The city was responsible for overseeing the entire construction project. The city issued bonds in its own name to pay the contractor for the construction. However, the city was not responsible in any manner for the bonds. The bonds were secured by the special assessments that are levied against properties within the special assessment district. Collections of special assessments would be recorded in which of the following funds of Dolan City?
A) Special assessment fund.
B) Agency fund.
C) Special revenue fund.
D) Debt service fund.

Question

Quizplus · Accepted Answer

Agency funds are used to account for situations where the government is acting as an agent, collecting or holding money that does not belong to the government itself. In this case, Dolan City is collecting special assessments on behalf of the special assessment district to pay for the sidewalks, but the city is not responsible for the bonds issued. This makes the agency fund the correct choice for recording collections of special assessments.

Citizens Within a Defined Geographic Area of Dolan City Created