In reconciling the net change in fund balances to the change in net position of governmental activities which of the following would increase the balance of change in net position of governmental activities?
A) Issuance of long-term debt.
B) Construction of capital assets.
C) Accrual of interest expense.
D) Depreciation expense.

Question

Quizplus · Accepted Answer

Construction of capital assets would increase the balance of change in net position of governmental activities because it represents an investment in infrastructure or other long-term assets that will provide future benefits to the government. Issuance of long-term debt would also increase the balance of change in net position, but it is not as certain that this would always be the case since the debt could be used to finance operations or other activities that do not have as direct a positive impact on the net position. Accrual of interest expense and depreciation expense both represent ongoing costs associated with the government's operations and would decrease the balance of change in net position.

In Reconciling the Net Change in Fund Balances to the Change