©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
NFP Exam 2 Questions And Answers |Latest
2025 | Guaranteed Pass.
Which of the following statements is correct regarding depreciation?
Depreciation expense should be recorded in the appropriate governmental funds, and recorded
in the governmental activities accounts.
Depreciation expense must be recorded in the governmental fund, but no depreciation expense
is recorded in the governmental activities accounts.
No depreciation can be recorded in any governmental fund, but depreciation expense must be
recorded in the governmental activities accounts.
No depreciation can be recorded in any governmental fund, nor is it permissible to record
depreciation expense in the governmental activities accounts. - Answer✔No depreciation can
be recorded in any governmental fund, but depreciation expense must be recorded in the
governmental activities accounts.
Four new computers, for which the cost exceeded the city's capitalization threshold, were
purchased for use in the city clerk's office using General Fund resources. Which of the following
entries would be required to completely record this transaction?
General JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
General JournalDebitCredit Governmental Activities: Expenses8,000 Vouchers Payable 8,000
General JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000
Governmental Activities: Expenses 8,000 Vouchers Payable 8,000
General JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000
Governmental Activities: Equipment 8,000 Vouchers Payable 8,000 - Answer✔General
JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000 Governmental
Activities: Equipment 8,000 Vouchers Payable 8,000
How should a capital lease for a general capital asset be recorded in the governmental activities
accounts at the inception of the lease?
Debit to a capital asset account.
Debit to a capital expense/expenditure account.
Credit to Capital Lease Obligations Payable.
Both A and C are correct. - Answer✔Both A and C are correct.
When part of a progress payment for construction is withheld until final settlement of the
contract, what account is credited?
Encumbrances.
Appropriations.
Contracts Payable-Retained Percentage.
Construction Expenditures. - Answer✔Contracts Payable-Retained Percentage.
At the inception of a capital lease for equipment the journal entry required in the capital
projects fund will include which of the following?
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
A debit to Equipment.
A debit to Capital Lease Expense.
A credit to Obligations under Capital Leases.
A credit to Other Financing Uses-Capital Leases. - Answer✔A credit to Other Financing Uses-
Capital Leases.
A general capital asset constructed several years ago by a capital projects fund was sold by the
General Fund. Entries are necessary in the:
General Fund only.
General Fund and the capital projects fund.
General Fund and governmental activities.
Governmental activities only. - Answer✔General Fund and governmental activities.
Which of the following activities or transactions would normally not be accounted for in a
capital projects fund?
Construction of a new city jail.
Construction of airport runways financed by revenue bonds and to be repaid from the revenues
of the city airport, an enterprise fund.
Lease of a building to be used as a city office building.
Construction of a new city park to be maintained primarily from General Fund revenues. -
Answer✔Construction of airport runways financed by revenue bonds and to be repaid from the
revenues of the city airport, an enterprise fund.
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
When a snowplow purchased by a government is received, it should be recorded in the
governmental activities general journal as a(an):
Expenditure.
Capital asset.
Appropriation.
Expense. - Answer✔Capital asset.
Which of the following statements is correct concerning interest expenditures incurred during
the period of construction of capital projects?
Interest expenditures may not be capitalized as part of the cost of general capital assets
reported in governmental activities.
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.
Interest expenditures must be capitalized as part of the cost of general capital assets reported
in the capital projects fund.
The capitalization of interest expenditures as part of the cost of general capital assets reported
in the capital projects fund is optional. - Answer✔Interest expenditures may not be capitalized
as part of the cost of general capital assets reported in governmental activities.
How should a capital lease for a general capital asset be recorded in the General Fund accounts
at the inception of the lease?
Debit to a capital asset account.
Debit to a capital expenditure account.
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NFP Exam 2 Questions And Answers |Latest
2025 | Guaranteed Pass.
Which of the following statements is correct regarding depreciation?
Depreciation expense should be recorded in the appropriate governmental funds, and recorded
in the governmental activities accounts.
Depreciation expense must be recorded in the governmental fund, but no depreciation expense
is recorded in the governmental activities accounts.
No depreciation can be recorded in any governmental fund, but depreciation expense must be
recorded in the governmental activities accounts.
No depreciation can be recorded in any governmental fund, nor is it permissible to record
depreciation expense in the governmental activities accounts. - Answer✔No depreciation can
be recorded in any governmental fund, but depreciation expense must be recorded in the
governmental activities accounts.
Four new computers, for which the cost exceeded the city's capitalization threshold, were
purchased for use in the city clerk's office using General Fund resources. Which of the following
entries would be required to completely record this transaction?
General JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000
1|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
General JournalDebitCredit Governmental Activities: Expenses8,000 Vouchers Payable 8,000
General JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000
Governmental Activities: Expenses 8,000 Vouchers Payable 8,000
General JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000
Governmental Activities: Equipment 8,000 Vouchers Payable 8,000 - Answer✔General
JournalDebitCredit General Fund: Expenditures8,000 Vouchers Payable 8,000 Governmental
Activities: Equipment 8,000 Vouchers Payable 8,000
How should a capital lease for a general capital asset be recorded in the governmental activities
accounts at the inception of the lease?
Debit to a capital asset account.
Debit to a capital expense/expenditure account.
Credit to Capital Lease Obligations Payable.
Both A and C are correct. - Answer✔Both A and C are correct.
When part of a progress payment for construction is withheld until final settlement of the
contract, what account is credited?
Encumbrances.
Appropriations.
Contracts Payable-Retained Percentage.
Construction Expenditures. - Answer✔Contracts Payable-Retained Percentage.
At the inception of a capital lease for equipment the journal entry required in the capital
projects fund will include which of the following?
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
A debit to Equipment.
A debit to Capital Lease Expense.
A credit to Obligations under Capital Leases.
A credit to Other Financing Uses-Capital Leases. - Answer✔A credit to Other Financing Uses-
Capital Leases.
A general capital asset constructed several years ago by a capital projects fund was sold by the
General Fund. Entries are necessary in the:
General Fund only.
General Fund and the capital projects fund.
General Fund and governmental activities.
Governmental activities only. - Answer✔General Fund and governmental activities.
Which of the following activities or transactions would normally not be accounted for in a
capital projects fund?
Construction of a new city jail.
Construction of airport runways financed by revenue bonds and to be repaid from the revenues
of the city airport, an enterprise fund.
Lease of a building to be used as a city office building.
Construction of a new city park to be maintained primarily from General Fund revenues. -
Answer✔Construction of airport runways financed by revenue bonds and to be repaid from the
revenues of the city airport, an enterprise fund.
3|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
When a snowplow purchased by a government is received, it should be recorded in the
governmental activities general journal as a(an):
Expenditure.
Capital asset.
Appropriation.
Expense. - Answer✔Capital asset.
Which of the following statements is correct concerning interest expenditures incurred during
the period of construction of capital projects?
Interest expenditures may not be capitalized as part of the cost of general capital assets
reported in governmental activities.
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.
Interest expenditures must be capitalized as part of the cost of general capital assets reported
in the capital projects fund.
The capitalization of interest expenditures as part of the cost of general capital assets reported
in the capital projects fund is optional. - Answer✔Interest expenditures may not be capitalized
as part of the cost of general capital assets reported in governmental activities.
How should a capital lease for a general capital asset be recorded in the General Fund accounts
at the inception of the lease?
Debit to a capital asset account.
Debit to a capital expenditure account.
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