Which of the Following Is Not True for Capital Projects

question 21

Multiple Choice

Which of the following is not True for capital projects funds?

• A) Capital projects funds use a Construction Work in Progress account to record costs until the project is completed.
• B) Encumbrance accounting is generally used.
• C) Capital projects funds use the modified accrual basis of accounting.
• D) Capital projects funds have a project-life focus.

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Definitions:

U-Shaped Average

This term seems unclear; possibly referring to the 'U-shaped' curve of the average cost, which decreases, reaches a minimum, and then increases with production volume.

Price Elasticity

Evaluating how price changes for a good translate into variations in consumer interest.

Cost of Entry

The initial capital and expenses required to start a business or enter a market.

Economies of Scale

The cost advantage achieved by an enterprise when production becomes efficient, as the scale of the operation increases.