Accounting Final Ch 17 Flashcards
Governmental units include all of the following except
a. counties.
b. school districts.
c. industrial development districts.
d. voluntary health and welfare organizations.
d. voluntary health and welfare organizations.
Which type of fund entities are used to account for the activities of nonbusiness organizations that are similar to those of business enterprises?
a. Expendable fund entities
b. Proprietary fund entities
c. Budgetary fund entities
d. Restricted fund entities
b. Proprietary fund entities
When budgeted expenditures are enacted into law, they are referred to as
a. estimated expenditures.
b. encumbrances.
c. appropriations.
d. expenditures.
c. appropriations.
The term used to describe the application of accounting to expendable fund entities is the
a. accrual method.
b. cash method.
c. modified cash method.
d. modified accrual method.
d. modified accrual method.
The entry to close appropriations, expenditures, and encumbrances accounts includes a debit to
a. Appropriations.
b. Expenditures.
c. Encumbrances.
d. both Appropriations and Encumbrances.
a. Appropriations.
The entry to record the receipt of office equipment previously encumbered includes a debit to
a. Office Equipment.
b. Encumbrances.
c. Reserve for Encumbrances.
d. both Office Equipment and Reserve for Encumbrances
c. Reserve for Encumbrances.
In accounting for and reporting inventory in the financial statements, the “Reserve for Inventory” account is used under
a. the consumption method.
b. the purchase method.
c. both the consumption and purchase methods.
d. none of these.
b. the purchase method.
The two basic statements prepared for expendable fund entities are a balance sheet and a(n)
a. income statement.
b. statement of revenue.
c. statement of expenditures and encumbrances.
d. none of these.
d. none of these.
If a credit was made to the fund balance in the process of recording a budget for a governmental unit, it can be assumed that
a. estimated expenses exceed actual revenues.
b. actual expenses exceed estimated expenses.
c. estimated revenues exceed appropriations.
d. appropriations exceed estimated revenues
c. estimated revenues exceed appropriations.
The “reserve for encumbrances—prior year” account represents amounts recorded by a governmental unit for
a. anticipated expenditures in the next year.
b. expenditures for which purchase orders were made in the prior year but disbursement will be in the current year.
c. excess expenditures in the prior year that will be offset against the current-year budgeted amounts.
d. unanticipated expenditures of the prior year that become evident in the current year.
b. expenditures for which purchase orders were made in
Which of the following requires the use of the encumbrance system?
a. Capital projects fund
b. Debt service fund
c. Internal service fund
d. Enterprise fund
a. Capital projects fund
The following related entries were recorded in sequence in the general fund of a municipality:
- Encumbrances 15,000
Reserve for Encumbrances 15,000 - Reserve for Encumbrances 15,000
Encumbrances 15,000 - Expenditures 15,350
Vouchers Payable 15,350
The sequence of entries indicates that
a. an adverse event was foreseen and a reserve of $15,000 was created; later the reserve was cancelled and a liability for the item was acknowledged.
b. an order was placed for goods or services estimated to cost $15,000; the actual cost was $15,350 for which a liability was acknowledged upon receipt.
c. encumbrances were anticipated but later failed to materialize and were reversed. A liability of $15,350 was incurred.
d. the first entry was erroneous and was reversed; a liability of $15,350 was acknowledged.
b. an order was placed for goods or services estimated to cost $15,000; the actual cost was $15,350 for which a liability was acknowledged upon receipt.
The reserve for encumbrances account is properly considered to be a
a. current liability if payable within a year; otherwise, long-term debt.
b. fixed liability.
c. floating debt.
d. reservation of the fund’s equity
d. reservation of the fund’s equity
Customers’ meter deposits which cannot be spent for normal operating purposes would be classified as restricted cash in the balance sheet of which fund?
a. Internal Service
b. Trust
c. Agency
d. Enterprise
d. Enterprise
What journal entry should be made at the end of the fiscal year to close out encumbrances for which goods and services have not been received?
a. Debit reserve for encumbrance and credit encumbrances.
b. Debit reserve for encumbrances and credit fund balance.
c. Debit fund balance and credit encumbrances.
d. Debit encumbrances and credit reserve for encumbrances.
c. Debit fund balance and credit encumbrances.
