Question

At the inception of a capital lease agreement for a piece of equipment used in enterprise fund operations;

a. An Other Financing Source is recorded in the enterprise fund.
b. A liability is incurred and reported in the enterprise fund-basis financial statements.
c. An expenditure is recorded in the enterprise fund.
d. All of the choices are correct.

Answer 1

A liability is incurred and reported in the enterprise fund-basis financial statements.

Step-by-step explanation:

When a capital lease agreement for a piece of equipment used in enterprise fund operations is initiated, a liability is incurred and reported in the enterprise fund-basis financial statements. This means that the company is acknowledging that it has a financial obligation to meet as a result of the lease agreement.