Reference no: EM132460398

Question 1 Interest incurred during construction of general capital assets cannot be capitalized as part of the cost of those assets.

• True or False

Question 2 When Sunny City makes its annual lease payment on an unpaid capital lease obligation, the journal entry for the governmental activities accounts will include:

A) A credit to Capital Lease Obligation Payable.

B) A debit to Expenditures-Principal of Capital Lease Obligation.

C) A debit to Capital Lease Obligation Payable.

D) A debit to Capital Lease Expense.

Question 3 Debt service fund activities are reported as part of governmental activities at the government-wide level.

• True or False

Question 4 In the context of regulatory utility plant accounting, original cost and historical cost have the same meaning.

• True or False

Question 5 An employee pension fund is a common example of an internal service fund.

• True or False

Question 6 Most investment trust funds distribute investment earnings and changes in investment values on a daily basis.

• True or False

Question 7 Assets that are held in an agency fund belong to the party or parties for which the government acts as agent; however, the government retains legal right of ownership in the event of party's bankruptcy.

• True False