Question 1

A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the General Fund at:

Accepted Answer

A)  $25,000. 
B)  $870,500. 
C)  $845,500. 
D)  $0.

Question 2

When a government transfers the rights and obligations of an asset to another legally separate governmental or private sector entity, the transaction is referred to as:

Accepted Answer

A)  A special assessment arrangement. 
B)  An infrastructure agreement. 
C)  A service concession arrangement. 
D)  A sale-leaseback agreement.

Question 3

The recorded premium on tax-supported bonds issued by a capital projects fund should be amortized at both the government-wide and fund levels.

Accepted Answer

A) True 
 B)False

Question 4

The following general capital assets were owned by the Town of Otterville: 
What amount should be recorded as capital assets in the town's governmental activities accounts?

Accepted Answer

A)  $0. 
B)  $3,250,000. 
C)  $5,250,000 
D)  $6,250,000

Question 5

Premiums received on tax-supported bonds are generally transferred to what fund?

Accepted Answer

A)  Internal service fund. 
B)  Debt service. 
C)  General. 
D)  Special revenue.

Question 6

If all asset, liability, and fund equity accounts of a capital projects fund were closed during a certain fiscal year, it is unnecessary to prepare any financial statements for that fund for that year.

Accepted Answer

A) True 
 B)False

Question 7

If a city's General Fund acquires a new copier under a lease agreement:
1) The cost of the copier should be recorded in the ________ general journal(s).
2) The "cost" of the copier is computed as ________.
3) A governmental fund should record the cost of the copier as an Expenditure, offset by a credit to ________.
4) The liability for the lease should be recorded in the ________ general journal(s).
5) The liability should be computed as ________.

Accepted Answer

The answer of If a city's General Fund acquires a...

Question 8

Capital assets used by governmental funds should be reported in:

Accepted Answer

A)  The appropriate governmental funds. 
B)  The property, plant, and equipment fund. 
C)  Departmental memorandum records. 
D)  The governmental activities column of the government-wide statements.

Question 9

GASB standards require that general capital assets be recorded in the fund statements at:

Accepted Answer

A)  Historical cost. 
B)  Fair value at the financial statement date. 
C)  Estimated cost at the financial statement date. 
D)  None of the options are correct.

Question 10

A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the government-wide statement of net position at:

Accepted Answer

A)  $25,000. 
B)  $870,500. 
C)  $845,500. 
D)  $0.

Question 11

A capital projects fund might be used to account for which of the following activities?

Accepted Answer

A)  Maintaining sidewalks. 
B)  Building a parking garage. 
C)  Providing water and sewer services. 
D)  Servicing long-term debt.

Question 12

Water rights purchased by a city would be considered an intangible asset.

Accepted Answer

A) True 
 B)False

Question 13

General capital assets acquired with capital projects fund resources would be recorded in essentially the same manner as if they had been acquired by the General Fund.

Accepted Answer

A) True 
 B)False

Question 14

To offset engineering and design costs incurred prior to the issuance of a long-term bond issue, a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National Bank. This transaction should be recorded in:

Accepted Answer

A)  The capital projects fund. 
B)  The debt service fund. 
C)  The special revenue fund. 
D)  None of the options are correct. Debt is not recorded in governmental funds.

Question 15

It is common practice for a portion of contractor payments to be withheld in the capital projects fund until final inspection and acceptance of the asset under construction has occurred.

Accepted Answer

A) True 
 B)False

Question 16

Streets, curbs, and sidewalks constructed or acquired through use of capital projects fund resources should never be reported in the financial statements of a government because they are for the use of the public, not for use by the government.

Accepted Answer

A) True 
 B)False

Question 17

Capital projects funds differ from the General Fund and special revenue funds in that the latter categories have a year-to-year life, whereas capital projects funds have a project-life focus.

Accepted Answer

A) True 
 B)False

Question 18

How should a lease for a general capital asset be recorded in the governmental activities accounts at the inception of the lease?

Accepted Answer

A)  Debit to a lease asset account. 
B)  Debit to a capital expense/expenditure account. 
C)  Credit to Lease Obligations Payable. 
D)  Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.

Question 19

GASB standards require that all governmental expenditures for long-lived assets be accounted for by a capital projects fund.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would be considered a general capital asset?

Accepted Answer

A)  A vehicle purchased from General Fund revenues. 
B)  A vehicle purchased and maintained by an enterprise fund. 
C)  A computer purchased from revenues of an internal service fund and used by the supplies department. 
D)  Real estate purchased with the assets of a pension trust fund.

Exam 5: Accounting for General Capital Assets and Capital Projects

A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the General Fund at:

When a government transfers the rights and obligations of an asset to another legally separate governmental or private sector entity, the transaction is referred to as:

The recorded premium on tax-supported bonds issued by a capital projects fund should be amortized at both the government-wide and fund levels.

The following general capital assets were owned by the Town of Otterville: What amount should be recorded as capital assets in the town's governmental activities accounts?

Premiums received on tax-supported bonds are generally transferred to what fund?

If all asset, liability, and fund equity accounts of a capital projects fund were closed during a certain fiscal year, it is unnecessary to prepare any financial statements for that fund for that year.

Capital assets used by governmental funds should be reported in:

GASB standards require that general capital assets be recorded in the fund statements at:

A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the government-wide statement of net position at:

A capital projects fund might be used to account for which of the following activities?

Water rights purchased by a city would be considered an intangible asset.

General capital assets acquired with capital projects fund resources would be recorded in essentially the same manner as if they had been acquired by the General Fund.

To offset engineering and design costs incurred prior to the issuance of a long-term bond issue, a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National Bank. This transaction should be recorded in:

It is common practice for a portion of contractor payments to be withheld in the capital projects fund until final inspection and acceptance of the asset under construction has occurred.

Streets, curbs, and sidewalks constructed or acquired through use of capital projects fund resources should never be reported in the financial statements of a government because they are for the use of the public, not for use by the government.

Capital projects funds differ from the General Fund and special revenue funds in that the latter categories have a year-to-year life, whereas capital projects funds have a project-life focus.

How should a lease for a general capital asset be recorded in the governmental activities accounts at the inception of the lease?

GASB standards require that all governmental expenditures for long-lived assets be accounted for by a capital projects fund.

Which of the following would be considered a general capital asset?