Due to an error,the general fund of Pueblo did not record an encumbrance for police equipment which had been ordered but not received on June 30,2009,the end of its fiscal year.Pueblo's outstanding encumbrances at year-end are nonlapsing.What was the effect of this error on the balance sheet of Pueblo's general fund?
A)Assets are overstated.
B)Liabilities are understated.
C)Total fund balance is overstated.
D)Unreserved fund balance is overstated.

Question

Quizplus · Accepted Answer

Unreserved fund balance is overstated because the encumbrance was not recorded, leading to an overstatement of available funds.

Due to an Error,the General Fund of Pueblo Did Not