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    Governmental budgets for capital projects and debt service

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    Although many governments prepare budgets for both capital projects and debt service funds and integrate them into their accounts, budgetary control over these funds is not as essential as it is for other governmental funds. Do you agree? Explain.

    If budgets are prepared for capital projects funds, in what significant way may they differ from those prepared for other funds?

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    Both the capital projects fund and the debt service fund are what might be called holding funds. They are different from annual appropriation funds which gather revenue and have transactions during the year to accomplish a service goal. Both of the 'holding' types of funds tend to be in existence for more than one year, but are still considered temporary funds because they have one specific goal to accomplish.

    For example, if a capital projects fund was opened for the specific purpose of the construction of a building, then the fund will disappear when the building project is completed. A debt service fund ...

    Solution Summary

    In 420 words, the solution explains the differences in certain types of governmental funds including why budgetary control is not essential in some cases.