At year-end Oakland County had $3,000 of outstanding purchase commitments on the books. After the appropriate closing entries are made, what is the effect on the total fund balance of Oakland County?
A) It is $3,000 greater than it would have been if the purchase commitments had been fulfilled by year-end.
B) It is $3,000 less than it would have been if the purchase commitments had been fulfilled by year-end.
C) It is the same as it would have been if the purchase commitments had been fulfilled by year-end; it will be reduced by $3,000 next year.
D) It is the same as it would have been if the purchase commitments had been fulfilled by year-end; it will not change next year.

Question

Quizplus · Accepted Answer

The outstanding purchase commitments of $3,000 are not yet fulfilled, so the fund balance is $3,000 greater than it would have been if the commitments had been fulfilled by year-end.

At Year-End Oakland County Had $3,000 of Outstanding Purchase Commitments