Question 1

When the budget is recorded in the general ledger, the Appropriations account is credited.

Accepted Answer

When a budget is recorded in the general ledger, the Appropriations account is credited to indicate the amount of funds authorized by the budget to be spent. This reflects a decrease in the budget authority or an increase in the obligation authority.

Question 2

When the budget is recorded in the general ledger, the Estimated Revenues account is credited.

Accepted Answer

In the general ledger, the Estimated Revenues account is debited when recording the budget, as it represents anticipated inflows of resources.

Question 3

When the budget is recorded in the general ledger, the Encumbrances account is debited.

Accepted Answer

When a budget is recorded in the general ledger, the Encumbrances account is not debited. Instead, an encumbrance is typically recorded by debiting the Encumbrances account and crediting the Budgetary Control or Encumbrances Outstanding account to reserve funds for anticipated expenses, not when the budget itself is recorded.

Question 4

When the annual budget is recorded in the general ledger, the Appropriations-Transfers Out account, if used, is credited.

Accepted Answer

When recording the annual budget in the general ledger, the Appropriations-Transfers Out account is credited to indicate the amount authorized to be transferred out of the fund, reflecting a decrease in the fund's available resources for other uses.

Question 5

When the entry recording the budget is reversed at year-end, the Appropriated Revenues account is credited.

Accepted Answer

The entry to reverse the budget at year-end typically involves debiting the Appropriated Revenues account to reverse the initial budgetary entry, not crediting it.

Question 6

When the entry recording the budget is reversed at year-end, the Appropriations-Transfer Out account, if originally used, is debited.

Accepted Answer

The answer of When the entry recording the budget is...

Question 7

When the entry recording the budget is reversed at year-end, the Budgetary Fund Balance Reserved for Encumbrances account is debited.

Accepted Answer

The Budgetary Fund Balance Reserved for Encumbrances account is credited, not debited, when reversing the entry recording the budget at year-end to close out the budgetary accounts and adjust the fund balance.

Question 8

Under the GASB codification, encumbrances outstanding at the end of a given year are not reflected in the operating statement of that year.

Accepted Answer

Encumbrances are commitments related to unperformed contracts for goods or services and are recorded to reserve that portion of the applicable appropriation. They are not recognized as expenditures or liabilities in the operating statement until the goods or services are received, thus outstanding encumbrances at year-end do not affect that year's operating statement under GASB standards.

Question 9

The authorization to spend a specified amount of money is referred to as an encumbrance.

Accepted Answer

The answer of The authorization to spend a specified amount...

Question 10

When an encumbrance outstanding at year-end lapses, it is necessary to reappropriate the item in the following year to honor the encumbrance.

Accepted Answer

When an encumbrance outstanding at year-end lapses, the funds are typically released back into the general fund or the specific fund from which they were originally encumbered, and do not require reappropriation in the following year unless the purchase or project is still intended to be pursued.

Question 11

Encumbrances accounting is part of budgetary accounting.

Accepted Answer

Encumbrances accounting is a component of budgetary accounting that records commitments made against budgeted funds before an actual expenditure is made, ensuring that the budget is not overspent.

Question 12

Commitments related to unperformed contracts for goods and services are called appropriations.

Accepted Answer

Commitments related to unperformed contracts for goods and services are typically referred to as "commitments" or "encumbrances" in accounting, not appropriations. Appropriations are amounts of money authorized by a legislative body to be spent for specific purposes.

Question 13

The entry to remove the budgetary accounts relating to encumbrances outstanding at year-end requires a credit to the Estimated Encumbrances account.

Accepted Answer

The entry to remove the budgetary accounts relating to encumbrances outstanding at year-end requires a debit to the Encumbrances account and a credit to the Budgetary Fund Balance - Reserve for Encumbrances account.

Question 14

The entry to remove the budgetary accounts relating to encumbrances outstanding at year-end requires a credit to the Encumbrances account.

Accepted Answer

At year-end, to remove the outstanding encumbrances, a credit is made to the Encumbrances account, and a corresponding debit is made to the Budgetary Control or Encumbrances Outstanding account, closing out the temporary accounts for the fiscal period.

Question 15

The entry to reestablish budgetary control over encumbrances outstanding at the end of the prior year as a result of a reappropriation in the new year requires a debit to the Encumbrances account.

Accepted Answer

When a reappropriation is made in the new year for encumbrances outstanding at the end of the prior year, the Encumbrances account is debited to reestablish budgetary control over those amounts, effectively reversing the original encumbrance entry.

Question 16

In governmental financial reporting, legal provisions do not have precedence over GAAP.

Accepted Answer

Legal provisions are not authoritative for governmental financial reporting. GAAP is the authoritative source for governmental financial reporting.

Question 17

Under the GASB codification, a Statement of Cash Flows is not required for governmental funds.

Accepted Answer

The GASB (Governmental Accounting Standards Board) codification specifies that the Statement of Cash Flows is required for proprietary funds (such as enterprise funds) and fiduciary funds, but not for governmental funds, which instead use the modified accrual basis of accounting and prepare a Statement of Revenues, Expenditures, and Changes in Fund Balances.

Question 18

Interfund services provided and used are reported outside the operating statements of the affected funds.

Accepted Answer

Interfund services provided and used are typically reported within the operating statements of the affected funds, as they represent transactions between funds within the same governmental entity.

Question 19

Interfund transfers are reported in the Statement of Revenues, Expenditures, and Changes in Fund Balance for governmental funds.

Accepted Answer

Interfund transfers are included in the "Other Financing Sources (Uses)" section of the Statement of Revenues, Expenditures, and Changes in Fund Balance for governmental funds.

Question 20

Nonreciprocal interfund transfers are not reported in the Statement of Revenues, Expenditures, and Changes in Fund Balance for governmental funds.

Accepted Answer

The answer of Nonreciprocal interfund transfers are not reported in...

Quiz 24: Governmental Accounting: Basic Principles and the General Fund