Chapter 16, Problem 10P

The City of Bagranoff holds $90,000 in cash that will be used to make a bond payment when the debt comes due early next year. The assistant treasurer had made that decision. However, just before the end of the current year, the city council formally approved using this money in this way. The city council has been designated as the highest level of decision-making authority for this government. What impact does the council’s action have on the reporting of fund financial statements?

1. a. Fund balance—unassigned goes down and fund balance—restricted goes up.
2. b. Fund balance—assigned goes down and fund balance—committed goes up.
3. c. Fund balance—unassigned goes down and fund balance—assigned goes up.
4. d. Fund balance—assigned goes down and fund balance—restricted goes up.