A city received a grant of $5,000,000 from a private agency. The money was to be used to build a new city library. In which fund should the money be recorded for the Fund Financial Statements?
A) the General Fund.
B) an Expendable Trust Fund.
C) a Capital Projects Fund.
D) an Agency Fund.
E) a Permanent Fund.

Question

Quizplus · Accepted Answer

The money received for building a new city library is a capital project, which requires significant investments of money to construct long-lasting assets. Therefore, it should be recorded in a Capital Projects Fund. This type of fund is used to account for the financial resources that are restricted, committed, or assigned for capital expenditure projects. The project should be completed within a specific period, and the money granted should be used solely for that purpose. The Fund Financial Statements will clearly identify the resources available for the specific capital project and the purpose for which they are intended.

A City Received a Grant of $5,000,000 from a Private