ACCOUNTING FOR GOVERNMENTAL AND
NONPROFIT ENTITIES FINAL PAPER
TESTED QUESTIONS WITH VERIFIED
ANSWERS COMPLETE STUDY SHEET
●● What basis of accounting is used for Capital Projects Funds?
Answer: Modified accrual basis of accounting
●● When are revenues recognized in Capital Projects Funds?
Answer: When revenue recognition criteria are met and when
measurable and available
●● What are expenditures recognized upon in Capital Projects Funds?
Answer: When liability is incurred, subject to exceptions
●● What is the primary purpose of Capital Projects Funds?
Answer: To account for financial resources restricted for capital outlays
●● What types of projects do Capital Projects Funds account for?
Answer: Acquisition or construction of major capital facilities and assets
,●● What are examples of capital assets accounted for in Capital Projects
Funds?
Answer: Buildings, roads, bridges, buses, and fire trucks
●● What is the typical duration of capital budgets?
Answer: May span 5 to 10 years
●● What are common financing sources for Capital Projects Funds?
Answer: General obligation bonds, federal/state grants, transfers from
other funds, investment earnings
●● What happens to resources remaining in Capital Projects Funds at
the end of a project?
Answer: They are transferred to another fund or returned to the grantor
●● What is the initial budget entry for Capital Projects Funds?
Answer: Debit Estimated revenues, Debit Estimated other financing
sources, Credit Appropriations, Debit or Credit Budgetary fund balance
●● What is recorded when proceeds from bonds are sold at par?
Answer: Debit Cash, Credit Other financing source—long-term debt
issued
, ●● What is a Retainage Payable?
Answer: A percentage of the billed amount retained until work is
completed and approved
●● What is the journal entry for progress billing in a construction
project?
Answer: Debit Expenditures—construction costs, Credit Retainage
payable, Credit Construction contracts payable
●● How are investments reported in Capital Projects Funds?
Answer: Generally reported at fair value at measurement date
●● What are exceptions to fair value reporting for investments?
Answer: Amortized cost for money market investments and certain
interest-earning contracts
●● What is the journal entry to transfer remaining funds in Capital
Projects Fund?
Answer: Debit Transfer out to..., Credit Cash
●● What is the accounting treatment for bonds issued at a premium?
Answer: Debit Cash, Credit Other financing source—long-term debt
issued, Credit Other financing source—bond issue premium
NONPROFIT ENTITIES FINAL PAPER
TESTED QUESTIONS WITH VERIFIED
ANSWERS COMPLETE STUDY SHEET
●● What basis of accounting is used for Capital Projects Funds?
Answer: Modified accrual basis of accounting
●● When are revenues recognized in Capital Projects Funds?
Answer: When revenue recognition criteria are met and when
measurable and available
●● What are expenditures recognized upon in Capital Projects Funds?
Answer: When liability is incurred, subject to exceptions
●● What is the primary purpose of Capital Projects Funds?
Answer: To account for financial resources restricted for capital outlays
●● What types of projects do Capital Projects Funds account for?
Answer: Acquisition or construction of major capital facilities and assets
,●● What are examples of capital assets accounted for in Capital Projects
Funds?
Answer: Buildings, roads, bridges, buses, and fire trucks
●● What is the typical duration of capital budgets?
Answer: May span 5 to 10 years
●● What are common financing sources for Capital Projects Funds?
Answer: General obligation bonds, federal/state grants, transfers from
other funds, investment earnings
●● What happens to resources remaining in Capital Projects Funds at
the end of a project?
Answer: They are transferred to another fund or returned to the grantor
●● What is the initial budget entry for Capital Projects Funds?
Answer: Debit Estimated revenues, Debit Estimated other financing
sources, Credit Appropriations, Debit or Credit Budgetary fund balance
●● What is recorded when proceeds from bonds are sold at par?
Answer: Debit Cash, Credit Other financing source—long-term debt
issued
, ●● What is a Retainage Payable?
Answer: A percentage of the billed amount retained until work is
completed and approved
●● What is the journal entry for progress billing in a construction
project?
Answer: Debit Expenditures—construction costs, Credit Retainage
payable, Credit Construction contracts payable
●● How are investments reported in Capital Projects Funds?
Answer: Generally reported at fair value at measurement date
●● What are exceptions to fair value reporting for investments?
Answer: Amortized cost for money market investments and certain
interest-earning contracts
●● What is the journal entry to transfer remaining funds in Capital
Projects Fund?
Answer: Debit Transfer out to..., Credit Cash
●● What is the accounting treatment for bonds issued at a premium?
Answer: Debit Cash, Credit Other financing source—long-term debt
issued, Credit Other financing source—bond issue premium
