A State Constructs an Office Building

question 37

Multiple Choice

A state constructs an office building.The construction is financed with: (1) a transfer of $1 million from the General Fund; (2) a grant of $2 million from the federal government; (3) bond proceeds of $7 million;and (4) earnings of $100,000 from temporary investment of bond proceeds.All transactions occur in one year.
-Based on the preceding set of facts,what should be reported in the financial statements of the General Fund for the year?

• A)other financing uses of $1 million
• B)expenditures of $1 million
• C)other financing sources of $2 million and other financing uses of $1 million
• D)revenues of $2 million and other financing sources of $7 million

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Definitions:

Government Transfers

Payments made by the government to individuals without the expectation of work or goods and services in return, like welfare or social security.

GDP

Gross Domestic Product, a measure of the economic performance of a country, representing the total value of all goods and services produced over a specific time period.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation).

Nominal GDP

The market value of all final goods and services produced within a country in a given period, measured using current prices without adjusting for inflation.