If the parks department's operations are financed by general revenues, an asset would be recorded in which journal(s)?

• A. General Fund only
• B. Governmental Activities only
• C. Both General Fund and Governmental Activities
• D. Neither

Answer: (B)

Long-term assets owned by a government entity are reported in the government-wide financial statements, not in the individual fund statements. Even when the parks department is financed with general revenues (reflecting general Fund resources), the asset itself is a capital asset that belongs to the government as a whole. In the fund (general fund) statements, the acquisition is shown as an expenditure and use of resources; the asset is not capitalized there due to the modified accrual basis used by governmental funds. The asset, along with depreciation and any related long-term liabilities, appears in the Governmental Activities portion of the government-wide statements. That's why this asset would be recorded in Governmental Activities only.