Exam 3: Issues of Budgeting and Control

When Spruce City receives goods at a cost of $9,700 that were encumbered in the prior year for $10,000, which of the following entries are required (assume that encumbrances lapse at year end)?

In which of the following cases would the reserve for encumbrances account be decreased?

Washington County received goods that had been approved for purchase but for which payment had not yet been made.Should the following accounts be increased?

State and local governments must prepare their GAAP budgetary comparisons on the modified accrual basis of accounting.

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?Fund balance at the end of the current year in comparison to fund balance at the end of the preceding year will be

A city received supplies that had been previously encumbered.The supplies were encumbered for $5,000 and had an actual cost of $4,900.To recognize this event the county should make which of the following entries?

A governmental entity has formally integrated the budget into its accounting records and uses encumbrance accounting.During the year the government ordered but had not yet received a new police car.What effect will this event have on the unencumbered balance in the account "Expenditures-capital outlay, police department"?

A university that formally integrates the budget in the accounting system and uses encumbrance accounting orders some new computers that will cost approximately $20,000.To recognize this event the university should make which of the following entries?

Per GASB standards, a budget-to-actual comparison must include columns for the actual results and

Which of the following is a primary benefit of a performance budget?

At year-end Oakland County had $3,000 of outstanding purchase commitments on the books.After the appropriate closing entries are made, what is the effect on the total fund balance of Oakland County?

Which of the following is the primary reason why governments formally integrate their legally adopted budget into their accounting systems?

Which of the following is the best reason for preparing budgets for government entities on the cash basis?

During the previous year, Bane County closed its Encumbrances account.At the end of the previous year there was $5,000 of outstanding purchase commitments.To restore these commitments to the accounts, which of the following entries would be required?

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

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 $11,000 of purchase commitments outstanding at the end of Year 1 and received those goods during Year 2 at a cost of $11,700, what would be the impact on total fund balance for Year 2?

A governmental entity has formally integrated the budget into its accounting records.At year-end the ledger account "Revenues from property taxes" has a debit balance.Which of the following is the best explanation for the debit balance?

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?

To close Encumbrances at the end of the year which of the following entries should be made?

Lincoln County uses encumbrance accounting to control expenditures.It charges the cost of outstanding purchase commitments to expenditures in the year they are ordered, not in the year they are received.If the county 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?