When a Capital Project Has Been Constructed Entirely with Bond

question 137

Multiple Choice

When a capital project has been constructed entirely with bond proceeds and funds are left over at the end of the project, which of the following would normally take place?

• A) The funds would be transferred to a debt service fund; the capital projects fund would debit Expenditures and the debt service fund would credit Other Financing Sources-Transfers In.
• B) The funds would be transferred to the General Fund and expended for any purpose desired by the management of the government.
• C) The funds would be returned to the bondholders.
• D) The funds would be transferred to a debt service fund; the capital projects fund would debit Other Financing Uses-Transfers Out and the debt service fund would credit Other Financing Sources-Transfers In.

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Definitions:

Capital Gains

The profit earned from the sale of an asset or investment which has increased in value over the holding period.

Shares

Units of ownership in a company or financial asset that represent a portion of the total capital.

Dividend Yield

A company's yearly dividend disbursement compared to its stock price, shown as a financial ratio.

Dividend Income

Income received from owning shares of stock in a company, usually paid out from the company's profits to shareholders at regular intervals.