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:

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The liability for special assessment bonds that carry a secondary pledge of a city's general credit should be reported in the balance sheets of the governmental activities accounts. The debt service fund is used to account for financial resources to meet the debt service requirements associated with general obligation debt. An agency fund is used to account for resources held by the government in a trustee capacity or as an agent for individuals or other governments. Since the liability pertains to the primary government's general credit, it should be reported in the governmental activities accounts. Disclosing the liability in the notes to the financial statements would provide additional information to the users but it is not sufficient to meet the reporting requirements. Therefore, the best choice is C.

The Liability for Special Assessment Bonds That Carry a Secondary