Use the Following Information to Determine Whether the Development Special

question 36

Multiple Choice

Use the following information to determine whether the Development Special Revenue and the Debt Service Funds should be reported as major funds based on asset amounts provided. P1P1_1.27Development Special Revenue Fund AssetsP1P1_EP1P1_13.97$740,000P1P1_E
P1P1_1.27Debt Service Fund AssetsP1P1_EP1P1_13.97$150,000P1P1_E
P1P1_1.27Total Governmental Fund AssetsP1P1_EP1P1_13.97$7,500,000P1P1_E
P1P1_1.27Total Governmental Fund and Enterprise Fund AssetsP1P1_EP1P1_13.97$8,750,000P1P1_E

• A) The Development Special Revenue Fund should be reported as major.
• B) The Debt Service Fund should be reported as major.
• C) Both the Development Special Revenue Fund and the Debt Service Fund should be reported as major.
• D) Neither the Development Special Revenue Fund nor the Debt Service Fund should be reported as major.

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Definitions:

Salvage Value

The anticipated remaining value of an asset at the conclusion of its operational life.

Payback Period

The length of time required to recover the initial investment in a project, without accounting for the time value of money.

Gross Revenues

The total sales revenue of a company without any deductions.

Internal Rate

Often refers to the internal rate of return (IRR), a metric used in capital budgeting to estimate the profitability of potential investments.