A city sells $15 million of general obligation bonds on October 1, 2019. The bonds mature at the rate of $1 million a year each September 30, starting September 30, 2020. The amount due September 30, 2020 is paid. How much should the city report as outstanding debt in the Debt Service Fund in its year-end fund level financial statements on December 31, 2020?

Question

Quizplus · Accepted Answer

Long-term liabilities, such as general obligation bonds and interest on them, generally are not reported in governmental funds until they are due and payable. This means that governmental fund balance sheets do not show a liability for even the current portion of long-term bonds and related interest unless it becomes due before year-end and is not paid, or unless it meets an exception to the due and payable rule.

A City Sells $15 Million of General Obligation Bonds on October