ACCY 161

Accounting for General Capital Assets and Capital Projects In-Class Quiz True/False 1
1. If a capital projects fund starts construction of a building in one year and finishes it in a subsequent year no entry need be made in the governmental activities accounts until the building is completed, inspected, and accepted. FALSE 2. If a general capital asset is disposed of without revenue or expenditure to the governmental unit, the event need be recorded only in the governmental activities accounts. TRUE 3. A governmental unit must capitalize the cost of improvements such as roads, bridges, sidewalks, and so forth, because the GASB requires disclosure of the cost of such assets in the basic financial statements. TRUE 4. A certified public accountant should issue a qualified audit opinion on financial statements in which general capital assets are recorded at estimated cost. FALSE 9. Property, plant, and equipment constructed or acquired by use of special assessment financing is not recorded in the governmental activities accounts because the assets belong to the property owners who paid for them and are not assets of the reporting entity. FALSE 13. In addition to required disclosures about general capital assets, a governmental unit must allocate the depreciation expense on those capital assets to the functional categories in which the assets are used. TRUE 14. Another required disclosure about general capital assets is the additions to, and deductions from, general capital assets during the course of a fiscal year. TRUE

35. Accountability for capital assets used by departments accounted for by the governmental funds of a governmental unit should be established in A) B) C) D) The appropriate governmental funds. The governmental activities accounts at the government-wide level. Departmental memorandum records. The property, plant, and equipment fund.

36. Which of the following would not be considered a general capital asset? A) A vehicle purchased from general fund revenues. B) A vehicle purchased and maintained by an enterprise fund. C) A computer purchased from grant revenues of a special revenue fund and used by the police department. D) Lighting on sidewalks constructed from special assessments.

The numbers will jump, so not a typo when it happens.

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ACCY 161

37. The following items were included in Star City's General Fund expenditures for the year ended June 30: Personal computer for the City Treasurer Furniture for the Mayors office $4,000 $10,000

How much should be classified as capital assets in Star City's General Fund balance sheet at June 30? A) B) C) D) $0 $ 4,000 $10,000 $14,000

47. A capital projects fund might be used to account for which of the following activities? A) B) C) D) Building a park. Maintaining roads and bridges. Providing water and sewer services. Servicing long-term debt.

69. For which of the following assets can the modified approach be elected in lieu of depreciation? A) B) C) D) Buildings and equipment. All general capital assets. Eligible infrastructure assets. All capital assets.

71. The budgetary account recommended for use by a capital projects fund is A) B) C) D) Estimated other financing sources. Encumbrances. Appropriations. Estimated revenues

74. A capital projects fund might be used to account for which of the following activities? A) B) C) D) Building an addition to the city council building. Maintaining roads and bridges. Operating a municipal golf course. Paying off the principal and interest on debt incurred to build a municipal swimming pool.

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