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:

Outflow

The movement of money out of a business or financial account, often associated with expenses or investments.

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.

Working Capital

The amount of a company's current assets minus its current liabilities, indicating the short-term financial health and operational efficiency of a business.

Salvage Value

The projected value of an asset when it reaches the end of its operational life.