A is corrent because per GASB Codification Section 1400, general fixed assets do not represent financial resources available for expenditure, but are items for which financial resources have been used. Therefore, when a general fixed asset is purchased, expenditures would be debited and accounts payable would be credited.
B is incorrect. A journal entry is recorded in the General Fund.
C is incorrect because per GASB 34, inclusion of a fixed asset purchased from General Fund revenues in the financial statements of a governmental fund would increase the fund balance which could mislead users of the fund balance sheet. Fixed Assets purchased with General Fund revenues are not assets of the General Fund but are assets of the governmental unit as a whole which will be reported in the government-wide financial statements.
D is incorrect. Assets are never reported as expenses.
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