What kind of funds includes the proceeds of general borrowing?

What kind of funds includes the proceeds of general borrowing?

• A. Debt Service Funds
• B. General Funds
• C. Capital Projects Funds
• D. Special Funds

Answer: (B)

When governments issue general borrowing, the proceeds are treated as financing sources for the fund that supports general government activities. If the debt is for general, non-project purposes, those bond proceeds go into the General Fund as an other financing source, making the General Fund the appropriate place to record the proceeds. Debt Service Funds are reserved for accumulating resources to pay debt service, not for holding the initial bond proceeds; Capital Projects Funds would hold bond proceeds only if they’re financing specific capital projects; Special Funds are for restricted programs. So the proceeds of general borrowing belong in the General Fund.

When governments issue general borrowing, the proceeds are treated as financing sources for the fund that supports general government activities. If the debt is for general, non-project purposes, those bond proceeds go into the General Fund as an other financing source, making the General Fund the appropriate place to record the proceeds. Debt Service Funds are reserved for accumulating resources to pay debt service, not for holding the initial bond proceeds; Capital Projects Funds would hold bond proceeds only if they’re financing specific capital projects; Special Funds are for restricted programs. So the proceeds of general borrowing belong in the General Fund.