Long term debt serviced from proprietary funds are recorded in the proprietary fund.

Question

Quizplus · Accepted Answer

Long term debt serviced from proprietary funds, such as revenue bonds, are recorded in the proprietary fund. This is because proprietary funds, such as enterprise funds and internal service funds, are used to account for activities that are primarily financed by user fees and charges. Since long term debt is typically issued to finance capital projects or major purchases, it is reasonable to record the debt in the same fund that will generate the revenue to service the debt.

Long Term Debt Serviced from Proprietary Funds Are Recorded in the Proprietary