Rutgers Municipal Capital And Trust Fund Accounting Practice Test

In capital budgeting, a project isn’t officially funded until a capital ordinance is adopted that both describes the project and names the funding source. This ordinance provides the legal authorization and earmarks how the funds will be raised (debt, grants, current funds, etc.), ensuring proper oversight and accountability for major investments. The only exception is expenditures from the Reserve for Preliminary Expenses, which are allowed to cover early costs like planning, design, and surveys before the formal capital ordinance is in place. Once those preliminary costs are complete and the project moves forward, a capital ordinance describing the project and specifying the funding source must be adopted. So the statement is correct: except for the Reserve for Preliminary Expenses, no capital project expenditure from the Capital Fund may occur without that ordinance and funding description.