A capital projects fund might be used to account for which of the following activities?

A capital projects fund might be used to account for which of the following activities?

• A. Building a parking garage.
• B. Purchasing office furniture for city hall.
• C. Funding day-to-day operations of police department.
• D. Paying debt service on outstanding bonds.

Answer: (A)

Capital projects funds are used to account for financial resources that are restricted for the construction, acquisition, or major rehabilitation of capital assets. They are intended for long‑term, large-scale projects financed from restricted sources such as bond proceeds or grants. A parking garage fits this purpose because it involves a major capital construction project that will create a lasting asset and typically requires dedicated financing tracked in a capital projects fund. The other activities represent ongoing or separate funding: day‑to‑day police operations are operating expenditures (not a capital project), debt service payments are handled by a debt service fund, and purchasing office furniture is usually a routine capital asset or operating expenditure rather than a major construction project (unless it’s part of a larger project). Hence, the parking garage is the best fit for a capital projects fund.

Capital projects funds are used to account for financial resources that are restricted for the construction, acquisition, or major rehabilitation of capital assets. They are intended for long‑term, large-scale projects financed from restricted sources such as bond proceeds or grants. A parking garage fits this purpose because it involves a major capital construction project that will create a lasting asset and typically requires dedicated financing tracked in a capital projects fund. The other activities represent ongoing or separate funding: day‑to‑day police operations are operating expenditures (not a capital project), debt service payments are handled by a debt service fund, and purchasing office furniture is usually a routine capital asset or operating expenditure rather than a major construction project (unless it’s part of a larger project). Hence, the parking garage is the best fit for a capital projects fund.