Multiple Choice Questions Identify the best answer for each of
Multiple Choice Questions
Identify the best answer for each of the following:
1. Which of the following general government capital asset acquisitions would be the least likely to be accounted for in a Capital Projects Fund?
a. Construction of a new fire station financed by a portion of a special tax levy (the tax levy is being accounted for in a Special Revenue Fund).
b. Acquisition of new police vehicles through a capital lease arrangement.
c. Construction of a new government center financed by the issuance of general obligation serial bonds.
d. Expansion of a town’s main thoroughfare from three to five lanes financed by a federal highway grant.

2. Budgets for Capital Projects Funds are
a. Often project-length, or multiyear, budgets.
b. Always required by GAAP.
c. Indirectly budgeted through an entity’s General Fund.
d. Common for projects financed by proprietary funds.

3. Which of the following are sometimes reported as long-term liabilities even if they have short-term maturities?
a. Bond anticipation notes.
b. Grant anticipation notes.
c. Tax anticipation notes.
d. Revenue anticipation notes.

4. Wakefield Heights sold $6,000,000 of general obligation serial bonds at a 1.5% discount to finance the construction of a new recreation center. Bond issuance costs were 2% of the face amount of the bonds. The entry to record the sale of the bonds in a Capital Projects Fund would be

5. Which of the following statements regarding the required GAAP reporting for a Capital Projects Fund is false?
a. A GAAP-basis balance sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balance are required for Capital Projects Funds.
b. The format of the Statement of Revenues, Expenditures, and Changes in Fund Balance for a Capital Projects Fund is the same as for a General Fund.
c. A GAAP-basis operating statement is not required for a Capital Projects Fund if a multi-year budget has been adopted.
d. It is not uncommon for a Capital Projects Fund operating statement to report an excess of expenditures over revenues during a project.

6. Common expenditures in a Capital Projects Fund include
a. Bond issue costs.
b. Payments to contractors.
c. Bond discounts.
d. Items a and b only.

7. Bond anticipation notes may be reported as a general long-term liability in which of the following circumstances?
a. It has been determined that there is a favorable market for issuing the bonds.
b. The government intends to refinance the bond anticipation notes within the next fiscal period.
c. The bond anticipation notes have an original maturity of more than one year.
d. Bond anticipation notes, like other anticipation notes, must always be reported as a fund liability.

8. In practice, which of the following is false regarding the disposition of any remaining fund balance of a completed Capital Projects Fund?
a. Frequently, a governing body will specify what shall be done with any remaining fund balance before the project even starts, subject to other legal or contractual requirements.
b. It is not uncommon for the remaining fund balance to be transferred to a Debt Service Fund.
c. Grantors may specify that remaining amounts will revert to them based upon their percentage of initial funding.
d. Remaining fund balance is transferred to the General Fund regardless of itssource.
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