Final answer:
Capital assets acquired through capital leases are not reported in the General Fund Balance Sheet; they are reported in the government-wide financial statements. The General Fund uses modified accrual accounting, which does not include long-term assets or lease obligations in its balance sheet.
Step-by-step explanation:
The statement that capital assets acquired through capital leases by the General Fund are reported in the General Fund Balance Sheet is false. In governmental accounting, under the modified accrual basis of the General Fund, capital assets acquired through leases are not recorded in the governmental funds' financial statements. Instead, these assets are reported in the government-wide financial statements, which use the full accrual basis of accounting. This distinction is crucial for accurate financial reporting in the public sector.
Under the modified accrual basis, the focus is on the flow of current financial resources. Expenditures for capital leases would typically be recognized in the period when the financial resources are expended rather than when the asset is acquired. Consequently, the General Fund Balance Sheet will not show the leased asset itself, but the corresponding financial obligation may be disclosed in the notes.
In contrast, the government-wide financial statements, which include the statement of net position, do reflect the capital assets, including those acquired through capital leasing arrangements. These statements are prepared using full accrual accounting, which incorporates all assets and liabilities, including long-term debt and capital leases.