Choose the best answer for each of the following questions.
Questions 1 and 2 are based on the following related journal entries that were recorded in chronological sequence in the general fund of a governmental entity:
|Entry A|| Encumbrances || 15,000 || |
| || Fund Balance Reserved for Encumbrances || || 15,000 |
|Entry B|| Fund Balance Reserved for Encumbrances || 15,000 || |
| || Encumbrances || || 15,000 |
|Entry C|| Expenditures || 15,150 || |
| || Vouchers Payable || || 15,150 |
The sequence of these journal entries indicates that:
|A)||An adverse event was foreseen and a reserve of $15,000 was created; later the reserve was canceled and a liability for the unfavorable event was recorded.|
|B)||An order was placed for goods or services estimated to cost $15,000; the actual cost was $15,150, for which a liability was recorded when the goods or services were received.|
|C)||Encumbrances were anticipated but later failed to materialize and were reversed; a liability of $15,150 was incurred.|
|D)||Entry A was erroneous and was reversed; a liability of $15,150 was incurred.|
Immediately after journal entry A was recorded, the general fund had a balanced annual budget for all transactions. Recording entries B and C would:
|A)||Not change the balanced condition of the budget|
|B)||Cause the general fund to show a budgetary surplus|
|C)||Cause the general fund to show a budgetary deficit|
|D)||Not affect the current fiscal year budget but would affect the budget of the following fiscal year|
A city's general fund budget for the forthcoming fiscal year shows estimated revenues in excess of appropriations. The recording of this budget results in an increase in the ledger account:
|B)||Budgetary Fund Balance|
|C)||Fund Balance Reserved for Encumbrances|
|E)||Unreserved and Undesignated Fund Balance|
Which of the following types of revenues generally is recognized in the general fund of a governmental entity?
|A)||Receipts from a city-owned parking structure|
|B)||Interest earned on investments held for retirement of employees|
|C)||Revenues of internal service funds|
Authority granted by a governmental entity's legislative body to make general fund expenditures and to incur obligations during a fiscal year is the definition of an:
When goods that previously were approved for purchase are received by a general fund but not yet paid for, what ledger account is credited?
|A)||Fund Balances Reserved for Encumbrances|
|E)||Some other account|
What ledger account might be credited to record a general fund's obligation for goods ordered but not yet received?
|D)||Fund Balance Reserved for Encumbrances|
A credit to the Budgetary Fund Balance ledger account in a journal entry to record the budget of a governmental entity's general fund indicates that:
|A)||Estimated expenses exceed actual revenues|
|B)||Actual expenses exceed estimated expenses|
|C)||Estimated revenues exceed appropriations|
|D)||Appropriations exceed estimated revenues|
Billings for goods and services to the general fund from other funds of a governmental entity are debited to the ledger account:
|B)||Other Financing Uses|
The profit motive is among the objectives of the two proprietary funds (enterprise funds and internal service funds) of a governmental entity.
Not every municipality has a general fund.
Under the modified accrual basis revenues are recognized only when they become both measurable and available.
Short term prepayments are recognized as assets.
Budgetary accounts are "estimated accounts" that are the opposite (in terms of debit and credit) from real accounts.