PDF Debt Service Funds - MCCC

Debt Service Funds

Chapter 8

Learning Objectives for DSFs

Understand basic purpose and nature of DSFs and liabilities serviced by them

Understand when DSFs are required and when other funds may be used

Understand when expenditures on GLTL are recognized

Understand when governments may accrue principal and interest expenditures before maturity

Record transactions and prepare financial statements

Understand accounting and reporting for special assessment DSFs

Understand requirements for GLTL term bonds and deep discount debt

Understand, record, & report refundings of GLTL

Purpose of DSFs

To account for the accumulation of resources for, and the payment of, general long-term debt principal and interest

Required only if

Legally mandated, or Financial resources are being accumulated

for principal and interest payments in future years

Debt Terminology

General obligation indicates "full faith and credit" of the governmental unit pledged to repay the debt

Revenue debt indicates specific revenue source dedicated to repay the debt

Double barrel is revenue debt with repayment guaranteed by full faith and credit of governmental unit

Types of Long-Term Liabilities

Bonds Notes Time Warrants Capital Leases (including leases, lease-

purchase agreements, certificates of participation, and installment purchase contracts)

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