The liability for special assessment bonds that carry a secondary pledge of a city's general credit should be reported in the balance sheet(s) of:

Question

Quizplus · Accepted Answer

The liability for special assessment bonds with a secondary pledge of the city's general credit should be reported in the balance sheet of the governmental activities accounts because the city is ultimately responsible for the debt. The liability should not be reported in a debt service fund because these bonds are not paid from the debt service fund. Also, it should not be reported in a custodial fund because a custodial fund is used to hold and manage resources for others, and in this case, the liability for the bonds is the city's responsibility. Disclosure in the notes to the financial statements is not sufficient because the liability is material and should be reported in the primary financial statements.

The Liability for Special Assessment Bonds That Carry a Secondary