Question

Since long-term liabilities are not recorded in the governmental funds, payments of debt principal are recorded as expenditures, rather than reductions of outstanding liabilities. True or False

Answer 1

Answer: True

Step-by-step explanation:

Since long-term liabilities are not recorded in the governmental funds, payments of debt principal are recorded as expenditures, rather than reductions of outstanding liabilities.

Capital project funds and Debt service funds, in particular, are used to acquire major capital assets and to issue and service long-term debt.