Proceeds of debt issued for the construction or acquisition of capital assets are recognized by the capital projects fund as "other financing sources" and as a liability in the governmental activities journal. A. TRUEB. FALSE

The correct answer is letter "A": True.

Explanation:

In governmental accounting, capital project fund is used to record the resources necessary for major capital assets which are those expected to generate value over the long-run such as buildings, machinery, and vehicles. Current liabilities derived from the capital assets are recognized by capital fund but long-term liabilities are recorded in the governmental activities journal.