A City Constructs a New Building by Issuing Debt in the Amount

question 17

Multiple Choice

A city constructs a new building by issuing debt in the amount of $3 million.How should the city report the debt proceeds in its Capital Projects Fund statement of revenues,expenditures,and changes in fund balance?

• A)as a revenue
• B)as an other financing source
• C)as a liability captioned general long-term obligations
• D)as a liability captioned due to the debt service fund

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Definitions:

Facility Expenses

Costs associated with the physical locations a business operates, including utilities, maintenance, and rent or mortgage payments.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate financial planning.

Activity Variance

Activity variance is the difference between the expected level of activity used to estimate fixed costs and the actual level of activity experienced.

Administrative Expenses

Overhead or general expenses related to the administration of a business, including office salaries, utilities, and legal costs.