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.