Special revenue funds account for the proceeds of specific revenue sources, such as certain taxes and special assessments, to finance specified activities. The journal entries and financial statements for special revenue funds are similar to those for a general fund.
Capital projects funds account for the receipt and payment of cash expended for the acquisition or construction of facilities other than those financed by proprietary funds or trust funds. The resources of a capital projects fund generally are derived from proceeds of general obligation bonds. Resources also may be received from tax revenues or from grants from other governmental entities.
The opening journal entry for a capital projects fund financed with the proceeds of general obligation bonds issued at face amount is as follows:
Cash
XXX
Other Financing Sources
XXX
Any premium or discount on the bonds is recorded in a separate ledger account.
The proceeds of the bond issue do not represent revenues to the capital projects fund. The liability for the bonds might be recorded in a voluntarily maintained general long-term debt account group until the bonds mature. On the maturity date, the bond liability is moved to the appropriate debt service fund, if any.
Journal entries to record encumbrances and expenditures in a capital projects fund are similar to those for a general fund; expenditures recorded might be accompanied by an end-of-year journal entry debit to Construction Work in Progress and a credit to Investment in Capital Assets from Capital Projects Fund a voluntarily maintained general capital assets account group. The revenues, expenditures, and encumbrances accounts of a capital projects fund are closed at the end of the fiscal year, and the capital projects fund itself is closed upon completion of the project by transfer of any unused cash to either a debt service fund or the general fund. A deficiency normally would be covered by a transfer of cash from the general fund.
The financial statements for a capital projects fund are a statement of revenues, expenditures, and changes in fund balance and a balance sheet.
Debt service funds account for the payments of interest and principal on long-term debt other than special assessment bonds, revenue bonds, and general obligation bonds serviced by an enterprise fund. The liabilities for bonds and interest to be paid by a debt service fund are not recorded in the fund until the obligations mature. Prior to the maturity date, the bond liabilities might be recorded a voluntarily maintained general long-term debt account group.
Cash received by a debt service fund from the general fund is credited to the Other Financing Sources ledger account. On the due date for any principal and interest payments, the Expenditures ledger account is debited and related Matured Bonds Payable and Matured Interest Payable accounts are credited.
The financial statements for a debt service fund are a statement of revenues, expenditures, and changes in fund balance and a balance sheet.
A general capital assets account group and a general long-term debt account group are not funds. Their purpose is to provide a memorandum record of plant assets and debt that are not recorded in funds.
Plant assets in the general capital assets account group are recorded at their cost, or at current fair value if donated to the governmental entity. The offsetting credit is to one of several Investment in General Capital Assets ledger accounts.
Depreciation may be recorded in a general capital assets account group with a debit to the appropriate Investment in General Capital Assets ledger account and a credit to an Accumulated Depreciation account. When a plant asset carried in a general capital assets account group is disposed of by the governmental entity, the carrying amount of the asset is removed from the memorandum ledger accounts in the general capital assets account group, and any disposal proceeds are recognized as revenues or other financing sources in the general fund.
An analysis of changes in general capital assets is included in a governmental entity's comprehensive annual financial report by means of a note to the financial statements.
General obligation bonds and other long-term debt of a governmental entity that are not accounted for in an enterprise fund might be recorded in a general long-term debt account group with a debit to the Amount to Be Provided ledger account and a credit to an appropriate liability account.
When cash or other assets have been accumulated in a debt service fund for the ultimate payment of a bond issue or other long-term liabilities, a journal entry debiting Amount Available in Debt Service Fund and crediting Amount to Be Provided is recorded in a general long-term debt account group (if one is used). When the bonds or other liabilities are accrued by the debt service fund, the memorandum ledger accounts are reversed in the general long-term debt account group at the end of the fiscal year.
An analysis of changes in general long-term debt is included in a governmental entity's comprehensive annual financial report by means of a note to the financial statements.
If a capital lease is executed for property of a governmental entity not recorded in a proprietary fund, the property might be recorded in a general capital assets account group, and the noncurrent potion of the lease liability might be recorded in a general long-term debt account group. The periodic lease payments typically are included in the expenditures of the general fund.
Special assessment bonds, which sometimes are issued by a governmental entity to finance construction projects pending receipt of special assessments payable in annual installments, might be recorded in a general long-term debt account group under the following circumstances: (a) if the governmental entity is obligated for the bonds in some manner; or (b) if no portion of the bonds is a direct obligation of an enterprise fund or is expected to be repaid from operating revenues of an enterprise fund.
