Which financial statements are required for a debt service fund?

• A. Balance sheet only
• B. Income statement only
• C. Balance sheet and statement of revenues, expenditures, and changes in fund balance only
• D. Statement of cash flows

Answer: (C)

Debt service funds are governmental funds, so their fund financial statements focus on current financial resources and use two statements: a balance sheet and a statement of revenues, expenditures, and changes in fund balances. The balance sheet presents assets, liabilities, and the fund balance, while the statement of revenues, expenditures, and changes in fund balances shows the inflows (revenues and other financing sources) and outflows (expenditures and other financing uses) that drive the change in fund balance.

A cash flow statement isn’t required for governmental fund types like a debt service fund, and while the term “income statement” is sometimes used conceptually, the official fund statement for this type uses the revenues, expenditures, and changes in fund balances format. Therefore, the combination of the balance sheet and the statement of revenues, expenditures, and changes in fund balances is the correct answer.