A City entered into a long-term capital lease for some office equipment.Assuming the city maintains its books and records in a manner to facilitate preparation of fund financial statements, what entry would be made in its General Fund to record this event?

Question

Quizplus · Accepted Answer

In the General Fund, expenditures should be recorded when the city enters into a long-term capital lease for office equipment. At the same time, the city should record other financing sources-leases to reflect the inflow of cash or reduction in lease payments due to the capital lease. Therefore, the correct entry would be to debit Expenditures and credit Other financing sources-leases.

A City Entered into a Long-Term Capital Lease for Some