The South City Golf Course purchased a new golf cart for $18,000 in cash at the beginning of the fiscal year. South City accounts for the golf course using an enterprise fund. It plans on using straight-line depreciation for its capital assets. South City expects the cart to last 6 years and to then have no salvage value.
1. Select the most correct answer: At the time of the cart purchase, the accountant for South City Golf Course will
a. Decrease cash by $18,000 and increase expenses by $18,000.
b. Decrease cash by $18,000 and increase equipment assets by $18,000.
c. Increase equipment assets by $18,000 and increase net assets by $18,000.
d. Not record this transaction, because governments do not record long-term assets.
2. Select the most correct answer: At the end of the fiscal year, the accountant for South City Golf Course will
a. Increase accumulated depreciation by $3,000 and increase expenditures by $3,000.
b. Increase accumulated depreciation by $3,000 and increase expenses by $3,000.
c. Increase accumulated depreciation by $18,000 and increase expenses by $18,000.
d. Not be required to record journal entries at this time.