Solving problems on fund transactions


Howard City maintains the following funds:

1. General
2. Special revenue
3. Capital projects
4. Debt service
5. Enterprise
6. Investment trust
7. Permanent
8. Agency

For each of the following transactions, indicate which fund would most likely be used to report the transaction:

a. The City collects $1 million of taxes for an independent fire district located within the City.

b. The City spends $1.2 million on street maintenance using the proceeds of a city gas tax dedicated for road and highway maintenance and improvements.

c. The City receives a bequest of $1.5 million. The donor's Will requires that the principal amount be invested in perpetuity and that the earnings on the investment be used to maintain a city park to be renamed for the donor.

d. The City collects water and sewer fees of $4.2 million.

e. The City pays $4 million to a contractor for work on the new bridge.

f. The City receives $1.3 million to invest on behalf of the County.

g. The City pays its police officers wages of $325,000.

h. The City pays $2.2 million in Bond Interest on its general obligation debt.

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Accounting Basics: Solving problems on fund transactions
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