Question

The City of Pringle purchased a vehicle for the police department. If the operations of the police department are financed by general revenues, an asset would be recorded in which journal(s)?

General Fund Governmental
Activities
A) No Yes
B) No No
C) Yes No
D) Yes Yes

Answer 1

The City of Pringle must account for the purchase of a police vehicle differently in the General Fund and in the Governmental Activities journal: it is not recorded as an asset in the General Fund but is recorded as an asset in the Governmental Activities journal, making option A) No Yes the correct choice.

Step-by-step explanation:

The City of Pringle's purchase of a vehicle for the police department, which is financed by general revenues, leads to different accounting treatments in the General Fund and the Governmental Activities journal. In governmental accounting, the General Fund is used to account for all financial resources except those required to be accounted for in another fund. The purchase of capital assets, such as vehicles, is typically not recorded as an asset in the General Fund, because expenditures for capital outlays are recorded instead. However, in the Governmental Activities journal, which is on the government-wide level, they record all capital assets, including those used by the police department. Therefore, the correct answer is that an asset would be recorded as "No" in the General Fund and "Yes" in the Governmental Activities journal, corresponding to option A) No Yes.