If a City Has an Unpaid Capital Lease Obligation at the Beginning

question 15

Multiple Choice

If a city has an unpaid capital lease obligation at the beginning of its fiscal year,the journal entry in the debt service fund to record the lease payment during that fiscal year will include:

• A) A debit to Capital Lease Obligations Payable.
• B) A credit to Expenditures-Principal of Capital Lease Obligation.
• C) A debit to Expenditures-Principal of Capital Lease Obligation.
• D) A debit to Interest Expense on Capital Leases.

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Definitions:

Stand-Alone Principle

An evaluation method in project management and capital budgeting where a project is assessed on its own merits without considering the company's overall financial position.

Capital Projects

Large, expensive, long-term projects intended to build upon, add to, or improve a property or system.

Operating Cash Flow

A measure of the cash a company generates from its regular business operations, excluding financing and investment activities.

Calculating Project

The process of determining the expected financial outcomes or viability of a proposed project or investment.