Question

The City of Savannah received 100 acres of land located in the city limits as a gift from a local property owner for use as a city park. The debit for the entry to record this event in the General Fund should be to

a. Land
b. General Capital Assets
c. No entry is required in the General Fund
d. Expenditures

Answer 1

The City of Savannah should record the gift of land in the General Capital Assets account, not in the General Fund, since it is a capital asset and the General Fund tracks operational transactions.

Step-by-step explanation:

The entry to record the gift of land for use as a city park in the General Fund for the City of Savannah should be a debit to General Capital Assets. The General Fund typically records day-to-day operational transactions, not capital assets. When a government receives a capital asset, such as land, without expending financial resources, the entry is not recorded in the General Fund but rather in the governmental activities accounts at the government-wide level. Consequently, the correct answer is: b. General Capital Assets.