The capital projects fund of a governmental entity is accounted for using which of the following bases of accounting?
A)Budgetary basis.
B)Cash basis.
C)Modified accrual basis.
D)Accrual basis.

Question

Quizplus · Accepted Answer

The capital projects fund of a governmental entity is accounted for using the modified accrual basis of accounting. This basis recognizes revenues when they are both measurable and available, and recognizes expenditures when the related fund liability is incurred. This means that the fund does not recognize revenues or expenditures until they are tied to specific capital projects. The budgetary basis (A) is a method of accounting for the use of resources and the level of authority of the governing body. The cash basis (B) recognizes revenues when they are received and expenditures when they are paid. The accrual basis (D) recognizes revenues when they are earned and expenses when they are incurred, regardless of the timing of cash receipts or payments.

The Capital Projects Fund of a Governmental Entity Is Accounted