Which of the following statements is true?

• A. The debt service fund is used to account for the accumulation of resources for principal and interest payments on long-term debt.
• B. The debt service fund records only revenue.
• C. The debt service fund accounts for operating costs of public safety.
• D. The debt service fund records only capital asset acquisitions.

Answer: (A)

The main idea being tested is what a debt service fund is used for in government accounting. A debt service fund is a governmental fund type set up specifically to accumulate resources to cover the principal and interest payments on long‑term debt. It collects dedicated revenues (such as property taxes or transfers) and investment earnings, and it disburses funds to meet those debt obligations when they come due. This purpose is distinct from funding daily operations or buying capital assets, which is why the other statements aren’t correct. The debt service fund does not record only revenue or only capital asset acquisitions, and it isn’t used for operating costs like public safety.