Answered: 1. To close Reserve for encumbrances at…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. To close Reserve for encumbrances at the end of the year which of the following entries should be made?

		Debit Reserve for encumbrances; credit Fund balance.
		Debit Reserve for encumbrances; credit Encumbrances.
		Debit Fund balance; credit Reserve for encumbrances.
		No closing entry needed.

2. In year 2017, a government was the recipient of a bequest of a piece of land that the government intends to sell. The piece of land had a historical cost of $850,000; and a fair value of $1,050,000. The city sold the within the availability period. The city should recognize on its governmental fund financial statements donations revenue of

		$-0-.
		$700,000.
		$850,000.
		$1,050,000

3. When a purchase order is released, a commitment is made by a governmental unit to buy a computer to be manufactured to specifications for use in property tax administration. This commitment should be recorded in the general fund as a (an) Debit to:

		Appropriation
		Encumbrance
		Expenditure
		Fixed asset

4. Under the modiï¬ ed accrual basis of accounting, revenues cannot be recognized

		Until cash has been collected
		Unless they will be collected within 60 days of year-end
		Until they are subject to accrual
		Until they are measurable and available