The City of Denton uses encumbrance accounting to control expenditures. It charges the cost of outstanding purchase commitments to expenditures in the year they are received, not in the year they are ordered. If the City had $7,000 of purchase commitments outstanding at the end of Year 1 and received those goods during Year 2 at a cost of $7,800, what would be the impact on total Fund Balance for Year 2? a. Total Fund Balance at the end of Year 2 would be $7,800 less than at the end of Year 1. b. Total Fund Balance at the end of Year 2 would be $800 less than at the end of Year 1. c. Total Fund Balance at the end of Year 2 would be $800 greater than at the end of Year 1. d. Total Fund Balance at the end of Year 2 would be same as it was at the end of Year 1.
Question 1
The City of Denton uses encumbrance accounting to control expenditures. It charges the cost of outstanding purchase commitments to expenditures in the year they are received, not in the year they are ordered. If the City had $7,000 of purchase commitments outstanding at the end of Year 1 and received those goods during Year 2 at a cost of $7,800, what would be the impact on total Fund Balance for Year 2?
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a. Total Fund Balance at the end of Year 2 would be $7,800 less than at the end of Year 1. |
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b. Total Fund Balance at the end of Year 2 would be $800 less than at the end of Year 1. |
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c. Total Fund Balance at the end of Year 2 would be $800 greater than at the end of Year 1. |
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d. Total Fund Balance at the end of Year 2 would be same as it was at the end of Year 1. |
Question 2
To close Encumbrances at the end of the year which of the following entries should be made?
a. Debit Encumbrances; Credit Fund Balance.
b. Debit Reserve for Encumbrances; Credit Encumbrances.
c. Debit Fund Balance; Credit Encumbrances.
d. No closing entry needed.
Question 3
A city formally adopted a budget at the beginning of the current year. Budgeted revenues were $500 and budgeted expenditures were $490. During the year actual revenues were $520 and actual expenditures were $480. Which of the following statements is true with regard to Fund Balance at the end of the current year. Fund balance at the end of the current year in comparison to fund balance at the end of the preceding year will be
a. $10 greater.
b. $30 greater.
c. $40 greater.
d. $50 greater.
Question 4
A governmental entity has formally integrated the budget into its accounting records. At the end of the third quarter the ledger account Expenditures--Salaries has a $100,000 debit balance. Which of the following is a true statement?
a. The entity has $100,000 available to spend on salaries.
b. The entity has incurred salaries in the amount of $100,000.
c. The entity had paid salaries in the amount of $100,000.
d. The entity has overspent its budget for salaries by $100,000.
Question 5
Which of the following is NOT true about
a. Cash basis budgeting permits a government to balance its budget by delaying cash disbursements.
b. Cash basis budgeting permits a government to balance its budget by advancing the recognition of revenue.
c. Cash basis budgeting encourages interperiod equity.
d. Cash basis budgeting complicates
Question 6
At year-end Oakland County had $3,000 in outstanding purchase commitments on the books. After the appropriate closing entries were made, what is the effect on the total Fund Balance of Oakland County?
a. It is $3,000 greater than it would have been if the purchase commitments had been fulfilled by year-end.
b. It is $3,000 less than it would have been if the purchase commitments had been fulfilled by year-end.
c. It is the same as it would have been if the purchase commitments had been fulfilled by year-end; it will be reduced by $3,000 next year.
d. It is the same as it would have been if the purchase commitments had been fulfilled by year-end; it will not change next year.
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