Question

Which of the following types of bonds of a governmental entity is never recognized as a liability of the debt service fund?

A. Serial bonds

B. Revenue bonds

C. Term bonds

D. General obligation bonds

E. None of the above.

Answer 1

The answer is E since in either case there is a liability exists .

General obligation bonds are issued for the construction or acquisition of major capital assets. The security pledged for the bonds is the general taxing power of the government. General obligation bonds are usually either term bonds, which are due in total on a single date, or serial bonds, which are repaid in periodic installments over the life of the issue.
Revenue bonds are issued to acquire, purchase, construct, or improve major capital facilities. The revenue generated by the facility or the activity supporting the facility is pledged as security for the repayment of the debt.