To offset engineering and design costs incurred prior to the issuance of a long-term bond issue, a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National Bank. This transaction should be recorded in:

Question

Quizplus · Accepted Answer

The transaction should be recorded in the capital projects fund as it is the fund responsible for financing long-term capital projects. The borrowing is a temporary financing option to offset engineering and design costs and does not involve any debt service payments. Therefore, it is not recorded in the debt service fund, and it does not relate to any specific program or project funded by a special revenue fund. Debt can be recorded in governmental funds, as long as it meets certain criteria for recognition and measurement.

To Offset Engineering and Design Costs Incurred Prior to the Issuance