Encumbrances for $900,000 in purchase orders are outstanding at the beginning of 2020. Encumbrances for $800,000 in purchase orders are outstanding at the end of 2020. Which statement is true concerning a comparison of legal budgetary and GAAP budgetary expenditures for 2020?

Question

Quizplus · Accepted Answer

The legal basis includes the $800,000 in ending outstanding purchase orders in 2020 expenditures, while the GAAP basis excludes these orders and includes the beginning purchase orders of $900,000. Therefore, GAAP basis expenditures are $100,000 higher.

Encumbrances for $900,000 in Purchase Orders Are Outstanding at the Beginning