Bond anticipation notes can be reported as short-term liabilities in the governmental fund financial statements.

• A. They are always long-term.
• B. They are never short-term.
• C. Only if financed with long-term debt.
• D. They can be short-term liabilities in governmental fund financial statements.

Answer: (D)

Bond anticipation notes are issued to finance current needs while awaiting the sale of long‑term bonds, so in the governmental fund statements they are classified based on the resources expected to be used to settle them. The fund reports focus on current financial resources, and the plan is to retire these notes with the proceeds of a future bond issue. That makes them short‑term liabilities in the governmental funds, even though the notes themselves are tied to a long‑term financing plan. The long‑term debt would appear in the government‑wide statements when the bonds are issued, but in the fund statements the BANs are treated as short‑term obligations. In short, they can be short‑term liabilities in governmental fund financial statements.