Which of the following can contribute toward a phantom balance in an operating
budget?
A) Transfer operating expenses to the capital budget.
B) Accelerate payment of income tax refunds.
C) Issue payroll checks on June 15 rather than June 20 July 1 fiscal year start).
D) Change the estimate of the property tax delinquency rate from 5 percent to 10 percent, to better reflect actual collection patterns.

Question

Quizplus · Accepted Answer

Transferring operating expenses to the capital budget can contribute to a phantom balance in the operating budget because it artificially reduces operating expenses and creates the appearance of a surplus. However, this practice can lead to long-term financial problems for the organization. The other options do not contribute towards a phantom balance in the operating budget. Accelerating payment of income tax refunds and changing the estimate of the property tax delinquency rate are legitimate budgeting practices that reflect actual revenue and expenditure patterns. Issuing payroll checks a few days earlier or later does not affect the budget balance as long as the total payroll expenses remain the same.

Which of the Following Can Contribute Toward a Phantom Balance