Exam 3: Issues of Budgeting and Control

Hill City uses encumbrance accounting to control expenditures.However, it charges the cost of outstanding purchase commitments to expenditures in the year they are received, not in the year they are ordered.If Hill City had $10,000 of purchase commitments outstanding at the end of Year 1 and received those goods during Year 2 at a cost of $9,800, what would be the impact on total fund balance for Year 2?

For which of the following funds would flexible budgeting be most valuable?

Cash-basis budgets help governments focus on interperiod equity.

Property taxes levied on the citizens of the Hill County would most appropriately be budgeted in which of the following budgets?

An officially adopted budget is generally called

Most budgets are prepared on a cash or modified cash basis.

The accounting cycle for most governments is two to three years, consistent with the terms of elected officials.

Reserve for encumbrances accounts should be closed at year-end.

Which of the following is NOT a function of a budget in the governmental environment?

Carolina City places an order for a specific item of equipment and encumbers $6,000 for that item.The equipment arrives with an invoice for $5,700.Which of the following entries should the city make upon receipt of the equipment?

Capital budgets focus on plans for the acquisition and construction of fixed assets.

Which of the following is NOT a reason that legally adopted budgets may not be readily comparable to amounts reported in the GAAP-based financial statements?

GASB requires that government entities present their budget-to-actual comparison data on which of the following bases of accounting?

Which of the following is NOT true about cash basis budgeting?

Which of the following bases of accounting has been established by GASB for use in the preparation of the general fund budget?

Which branch of local (city and county)government most commonly prepares the budget?

The City of Lakeview adopts its budget on a basis of accounting that permits outstanding purchase commitments to be charged against the budget in the year that the goods are ordered instead of in the year they are received.During the year the city ordered and received $4,000 of supplies (of which $3,000 had been paid and $1,000 was unpaid)and had $500 of outstanding purchase commitments for supplies at year-end.In the budget-to-actual comparison, the expenditures for supplies would be:

A public school district formally adopted a budget with estimated revenues of $800 and approved expenditures of $780.Which of the following is the appropriate entry to record the budget?

A review of Park City's books shows the following information: I.$2,500 of outstanding vouchers payable II)$3,000 of outstanding purchase order amounts Which of these amounts would you expect to see in the general fund's encumbrances account?

Why would a government be more likely than a not-for-profit organization to integrate its budget into its accounting system?