A governmental entity is funding a capital project with the issuance of general obligation bonds, as well as a federal grant. The grant would be reported on the operating statement as

Question

Quizplus · Accepted Answer

The federal grant is a direct increase in revenue for the governmental entity, therefore it should be reported as a revenue on the operating statement. Choice A (other financing source) would be appropriate if the entity was issuing bonds to fund the grant, but this is not the case. Choice C (nonoperating revenue) would be appropriate for revenue generated by an activity that is not related to the entity's primary operations. Choice D (other financing use) would be appropriate for the use of bond proceeds, but not for the federal grant.

A Governmental Entity Is Funding a Capital Project with the Issuance