_____ Which Statement Is Correct Regarding Encumbrances Outstanding at Year-End

Multiple Choice

_____ Which statement is correct regarding encumbrances outstanding at year-end?

A) The following year's budget can be prepared in accordance with GAAP if they are not allowed to lapse.
B) They are reported as encumbrances in the current year's operating statement and as expenditures in the following year's operating statement in accordance with GAAP.
C) They are not reported in the current year's operating statement but are reported in the following year's operating statement as expenditures in accordance with GAAP.
D) Whether or not they lapse at year-end determines how and when they are reported in the operating statements presented on a GAAP basis.
E) None of the above.