Effective Capital Budgeting for General Capital Assets of a Government

question 51

Multiple Choice

Effective capital budgeting for general capital assets of a government requires:

• A) Intermediate and long-range capital improvement plans for general capital assets.
• B) Nonfinancial information on physical measures and service condition of capital assets of component units.
• C) Consideration of how proprietary fund capital projects will be financed.
• D) Information about the capital asset needs of a motor pool accounted for as an internal service fund.

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Definitions:

Selling Price

The amount at which a product or service is offered to the market.

Variable Cost

Expenses that change in proportion to the activity or volume of a business, such as raw materials and labor costs directly tied to production levels.

Average Variable Cost

This is the average amount of variable costs (costs that change with production levels) per unit produced.

Net Profits

The actual profit after working expenses not included in the calculation of gross profit have been paid.