Final answer:
Option (A), All capital assets must be reported on a fund's balance sheet, which is a practice that aligns with fundamental accounting principles where assets, including capital assets, must balance out with liabilities and net worth.
Step-by-step explanation:
The statement that all capital assets acquired by or used by a fund should be reported in the fund balance sheet or statement of net position is generally True.
Capital assets are significant pieces of property such as buildings, vehicles, land, and equipment that the fund owns and uses in its operations. These are reported as assets on the balance sheet. On a balance sheet, assets including capital assets must equal the sum of liabilities and net worth.
This concept is reflected in T-accounts, an accounting tool that helps visualize the relationship between a company's assets, liabilities, and equity. In essence, assets on the left must balance out liabilities plus net worth (or equity) on the right to ensure that the equation assets = liabilities + net worth holds.
For a bank's balance sheet, capital assets and any reserves or loans are listed on the asset side, whereas the deposits and other debts are listed as liabilities. The difference between these assets and liabilities is known as the bank's net worth or capital, highlighting the financial health of the bank.