What is the purpose of a debt service fund?
A)to accumulate resources for paying interest on all debt issued by the government
B)to account for all outstanding long-term and short-term debt issued by the government
C)to account for outstanding general long-term debt
D)to accumulate resources for paying principal and interest on general long-term debt

Question

Quizplus · Accepted Answer

The purpose of a debt service fund is to accumulate resources for paying principal and interest on general long-term debt. Choice A is incorrect because it only refers to interest payments, whereas debt service funds are also used to pay off the principal amount owed. Choice B is incorrect because it includes all types of debt, not just general long-term debt. Choice C is incorrect because it only refers to accounting for the debt, not accumulating resources for payment.

What Is the Purpose of a Debt Service Fund