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This post addresses the issuance of general obligation bonds

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Assume that Kelly County issues $2,000,000 in general obligation bonds to build a new fire station and $8,000,000 in revenue bonds to finance the upgrade of their water treatment facility. How will these transactions affect the funds of the county?
a. Financial assets of the Capital Projects Fund will increase by $10,000,000, as will the related fund liabilities.

b. Financial assets and related fund liabilities of the Capital Projects Fund will increase by $2,000,000; current assets and long-term liabilities will increase by $8,000,000 in the Water Enterprise Fund.

c. Financial assets, but not the related fund liabilities, will increase in the Capital Projects Fund by $2,000,000; current assets and the long-term liabilities will increase by $8,000,000 in the Water Enterprise Fund.

d. Financial assets, but not the related fund liabilities, will increase in the General Fund by $10,000,000.

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Solution Summary

The solution provides the correct choice and explanation to determine how the issuance of general obligation bonds should be treated for the County.

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The second part of B is wrong.

The first part of C is wrong, it would affect related fund liabilities because it's ...

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