A Government Had Capital Outlay Expenditures of $226,000 During the Year

A government had capital outlay expenditures of $226,000 during the year for the public safety function accounted for in the General Fund. It was determined that only $195,000 of the expenditures met the capitalization threshold of the government. How would this transaction appear on the operating statement conversion worksheet in the two-worksheet conversion approach?

A) The only effect would be to reduce capital outlay expenditures by $226,000.
B) Capital outlay expenditures would be reduced by $226,000, and public safety expenditures/expenses would be increased by $31,000.
C) Capital outlay expenditures would be reduced by $195,000, and public safety expenditures/expenses would be increased by $31,000.
D) The only effect would be to reduce capital outlay expenditures by $195,000.