Acquisition of a general capital asset represents an expenditure in a governmental fund, but requires capitalization of an asset at the government-wide level.

Question

Quizplus · Accepted Answer

This statement is true. In governmental accounting, the acquisition of a capital asset is recorded as an expenditure in the governmental fund, but the asset itself must be capitalized and recorded on the government-wide financial statements as a long-term asset with a corresponding long-term liability (if financed). This is due to the difference in measurement focus between governmental funds (short-term) and the government-wide financial statements (long-term).

Acquisition of a General Capital Asset Represents an Expenditure in a Governmental