D7- 1 Discuss what type of fund you would use to account for the following activities:
a. A city is about to construct a new sports arena. It will use a Capital Projects Fund to account for the accumulation of resources to build the arena. The city council has passed a law calling for a special hotel– motel occupancy tax to pay the debt service on the bonds issued to build the arena. In what fund should the occupancy tax be accounted for?
b. Fed up with the poor response time in restoring power resulting from damages caused by recent storms, the city acquires the resources of a private electric power company. The city issues revenue bonds to pay for the power company’s assets; the bonds are secured solely by a pledge of thenet revenues resulting from the charges for supplying power to the citizens of the city and to city government offices.
c. To ensure that the city obtains the best possible price for its supplies and equipment, the city decides that all agencies within the government must obtain needed supplies through the city’s purchasing department. The purchasing department will obtain a warehouse for certain items used by all departments.