The liability for general obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings should be recorded in:
A) An enterprise fund.
B) An internal service fund.
C) An enterprise fund and the business-like activities accounts.
D) The governmental activities accounts.

Question

Quizplus · Accepted Answer

General obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings should be recorded in an enterprise fund. Enterprise funds are used to account for the activities of a government that are similar to those of a for-profit business, such as utilities. The liability for these bonds should be recorded in the enterprise fund since it is the primary tool for accounting for these business-like activities.

The Liability for General Obligation Bonds Issued for the Benefit