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How are the activities of Debt Service Funds controlled?

How are the activities of Debt Service Funds controlled?

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Answer:- Definition of Debt Service Funds- A Debt service funds is a cash reserve that is made to benefit interest and principal on debt. It is also known as sinking fund. Debt service funds are necessary only if it is legally mandated or resources are being acquired for future debt service deposits.

The actions of Debt Service Funds normally are controlled through the provisions of bond agreements and budgetary endorsements. Managers must check these provisions to be assured that the governmental system does not disrupt any restrictive conventions. Some of the governmental systems even file budgets in the accounts to control the consumed activities of these funds. So, the activities of Debt service funds are controlled in this way.

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