Question

In what circumstance is a Capital Projects Fund required to be used in governmental accounting? Select one: A. To record the acquisition or construction of all major capital assets, except infrastructure assets B. To record the acquisition or construction of all capital assets C. When capital projects are at least partially financed by general obligation bond proceeds D. To record the acquisition or construction of any capital asset that is not recorded in an Enterprise Fund

Answer 1

The correct answer is C) When capital projects are at least partially financed by general obligation bond proceeds.

The circumstance when a Capital Projects Fund is required to be used in governmental accounting is "When capital projects are at least partially financed by general obligation bond proceeds."

In governmental accounting, capital project fund serves to trace the financial resources that are used to have a capital asset that is considered major. This capital project has long-time goals and has large costs. The fund does not run forever. When the asset is done, the fund is terminated. You use this king of capital projects fund when there are plans to build public infrastructure that benefits the community such as roads, bridges, dams, or transportation projects.