Bond Anticipation Notes and temporary notes are considered permanent financing.

Bond Anticipation Notes and temporary notes are considered permanent financing.

• A. True
• B. False
• C. It depends
• D. Not applicable

Answer: (B)

Bond Anticipation Notes and other temporary notes are short-term financing tools used to bridge the gap between when a project is funded and when long-term financing is in place. They’re not permanent financing because their role is to provide interim funds, typically to be repaid from the proceeds of a future bond issue or from available current revenues once they come in. In fund accounting, permanent financing refers to long-lived debt that will be repaid over many years from dedicated revenue streams. BANs are extinguished when the long-term bonds are issued, and the debt service shifts to the new long-term debt. Because of their short-term nature, they do not constitute lasting funding for a project.

Bond Anticipation Notes and other temporary notes are short-term financing tools used to bridge the gap between when a project is funded and when long-term financing is in place. They’re not permanent financing because their role is to provide interim funds, typically to be repaid from the proceeds of a future bond issue or from available current revenues once they come in. In fund accounting, permanent financing refers to long-lived debt that will be repaid over many years from dedicated revenue streams. BANs are extinguished when the long-term bonds are issued, and the debt service shifts to the new long-term debt. Because of their short-term nature, they do not constitute lasting funding for a project.