A city acquired a dump truck for general government usage. The government paid nothing down and signed a 10%, short-term note payable for the price of the truck, $80,000. The note will mature in the next fiscal year. What items should appear in the statement of revenues, expenditures, and changes in fund balance for the General Fund in the year the truck was purchased?

Question

Quizplus · Accepted Answer

The statement of revenues, expenditures, and changes in fund balance should reflect the capital outlay expenditure of $80,000 for the purchase of the truck and also include the interest expenditures on the note payable. This is because the government has made a commitment to pay the principal and the interest of the note payable. Depreciation expense would not appear in the statement of revenues, expenditures, and changes in fund balance as it is a non-cash expense and does not affect the fund balance directly.

A City Acquired a Dump Truck for General Government Usage