Which of the Following Statements Is True Concerning Accounting and Financial

question 42

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 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.

---

Definitions:

Weighted Average Cost

A method used to calculate the average cost of a group of assets, taking into account the varying weights of each asset.

Systematic Risk

The type of risk inherent to the entire market or market segment, which cannot be mitigated or eliminated through diversification.

Cost of Equity

The return a company theoretically pays to its equity investors to compensate them for the risk they undertake by investing in the company's stock.

Required Rate of Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular project or investment.