The liability for general obligation bonds should be recorded in the:

• A. Capital projects fund
• B. General fund
• C. Enterprise fund
• D. Governmental activities journal

Answer: (D)

Long-term liabilities of a government, like general obligation bonds, are recorded in the government-wide financial statements as part of governmental activities. These statements use accrual accounting and present the government’s obligations as long-term debt, not as resources in the funds. The funds (general fund, capital projects fund, etc.) focus on current financial resources and typically show bond proceeds and debt service activities, but not the outstanding long-term liability itself. The enterprise fund is for business-type activities and isn’t appropriate for reporting general obligation debt of governmental activities. So the liability belongs in the governmental activities journal, which reflects the government-wide view of its long-term obligations.