Which of the Following Statements Is Correct Concerning Interest Expenditures

question 54

Multiple Choice

Which of the following statements is correct concerning interest expenditures incurred during the period of construction of capital projects?

• A)Interest expenditures may not be capitalized as part of the cost of general capital assets reported in governmental activities.
• B)Interest expenditures may be capitalized as part of the cost of general capital assets reported in the governmental activities accounts at the government-wide level.
• C)Interest expenditures must be capitalized as part of the cost of general capital assets reported in the capital projects fund.
• D)Interest expenditures may optionally be capitalized as part of the cost of general capital assets reported in the capital projects fund.

---

Definitions:

Utility Function

An economic model that describes how consumers rank different bundles of goods according to the level of satisfaction they provide.

Wealth

An abundance of valuable resources or material possessions, or the control of such assets.

Flood

A flood is an overflow of water that submerges land that is usually dry, often caused by heavy rain, melting snow, or dam failure, leading to potential damage and loss.

Von Neumann-Morgenstern

A theory of expected utility, which provides a method for making decisions based on the expected outcomes of various choices.