Which of the following transactions would be recorded in a Capital Projects Fund?

Answer options:

Proceeds from a bond issue to finance the daily operations of the city transit system

Receipt of a state grant restricted for road maintenance

Proceeds from a general obligation bond restricted for the construction of a new city hall

Accumulation of resources to pay principal and interest on general obligation bonds

How to approach this question

Match the fund type to the activity. Capital Projects = Construction/Acquisition of major capital assets. Debt Service = Paying back debt. Special Revenue = Restricted operating funds. Enterprise = Business-like activities.

Full Answer

C.Proceeds from a general obligation bond restricted for the construction of a new city hall✓ Correct

The Capital Projects Fund is used to account for financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets (like a new city hall).

Common mistakes

Confusing capital construction (CPF) with debt payment (DSF) or maintenance (SRF).

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