Which of the Following Statements Is True Concerning Accounting and Financial

question 3

Multiple Choice

Which of the following statements is true concerning accounting and financial reporting practices related to capital asset acquisitions?

• A) Routine capital purchases such as vehicles and equipment often may be financed and accounted for in a General Fund.
• B) Most capital lease transactions related to governmental funds are accounted for initially in either the General Fund or a Debt Service Fund.
• C) Capital Project Funds may be used only for acquisition or construction of major capital facilities.
• D) Most capital projects last only for on fiscal year.

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Definitions:

Call Premium

The extra amount over the par value that a buyer must pay to purchase a call option, which gives the right, but not the obligation, to buy an asset at a specified price.

Zero-Coupon Bond

A type of bond that is sold at a discount to its face value, pays no interest (coupon), and is redeemed at its face value at maturity.

Face Value

The nominal value or dollar value of a security stated by the issuer, also known as the "par value" especially in the context of bonds.

Quoted

The stated price at which a security is offered for sale on a stock exchange or in the financial markets.