An Enterprise Fund Entered into a Capital Lease for the Purchase

question 1

Multiple Choice

An Enterprise Fund entered into a capital lease for the purchase of equipment. The capitalizable cost of the asset was $300,000 and fund made a $30,000 down payment. In the year of inception the Enterprise Fund would report

• A) Expenses of $30,000.
• B) Capital assets of $300,000.
• C) Long-term liabilities of $300,000.
• D) An other financing use of $270,000 and expenses of $30,000.

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Definitions:

Labor Hour Rate

The cost associated with labor per hour worked, used in calculating the cost of producing goods or services.

Job

A specific task or project, often within the context of job order production, where products are made to order.

Materials Price Variances

The difference between the actual cost of materials used in production and the standard or expected cost, indicating if materials were more or less expensive than planned.

Quantity Variances

Quantity variances refer to the difference between the actual quantity of materials or labor used and the expected quantity needed for production.