The issuance of tax anticipation notes would include which of the following entries with a credit to Tax Anticipation Notes Payable?

• A. Revenues
• B. Tax Anticipation Notes Payable
• C. Tax Anticipation Notes Receivable
• D. Interfund Loan

Answer: (B)

The main idea is that issuing a tax anticipation note is a financing activity that creates a liability. When the note is issued, the government receives cash and records a corresponding obligation to repay the note. Therefore the entry includes a debit to Cash (the funds received) and a credit to Tax Anticipation Notes Payable (the liability). The other options don’t reflect a debt obligation: Revenues would represent inflows of resources, not a liability; Tax Anticipation Notes Receivable would be an asset, not what is created by issuing the note; an Interfund Loan would suggest a transfer between funds rather than the note payable.