In the reconciliation process from fund balances to the net position of governmental activities, which item would be added?

• A. Bonds payable.
• B. Interest payable.
• C. Delinquent taxes.
• D. Construction work in progress.

Answer: (D)

When moving from the governmental funds balance sheet to the government-wide statement of net position, you adjust for items that the fund statements don’t recognize but the government-wide statements do. Construction work in progress represents ongoing capital projects that will become capital assets on the government-wide financial statements. In the fund, costs for these projects are recorded as expenditures, not as capital assets, so they don’t appear as assets in the fund balance. Adding construction work in progress brings in that capital asset value to reflect what will be shown on the government-wide level, increasing net position accordingly. The other options relate to liabilities or current assets that are handled differently in the reconciliation and do not serve to increase the asset base in this context.