Question 1

The difference between an expenditure and an encumbrance is?

Accepted Answer

An expenditure is the actual amount of an authorized liability, while encumbrances are estimates of liabilities to be incurred in the future.

Question 2

Which of the following is true regarding the final appropriations budget?

Accepted Answer

The final appropriations budget is a legally binding document that specifies the maximum amount of money that can be spent on a particular project, department, or initiative. It cannot be changed at any time by the accounting department or exceeded without proper authorization. Therefore, option C is the correct answer. Options A and B are incorrect because they do not align with the principles of budgeting and financial management.

Question 3

When a liability is incurred as authorized by an appropriation,the appropriation is said to be:

Accepted Answer

An appropriation is considered to be expended when authorized liabilities are incurred.

Question 4

With respect to reporting for the General Fund,what is the difference between GAAP basis and budgetary basis reporting?

Accepted Answer

The answer of With respect to reporting for the General...

Question 5

Define and give an example of each of the following categories of Fund Balance outlined in GASB Statement No.54:
Nonspendable
Restricted
Committed
Assigned
Unassigned

Accepted Answer

The answer of Define and give an example of each...

Question 6

List the four eligibility requirements for a government to record revenue from a nonexchange transaction. Provide a brief explanation for each.

Accepted Answer

The answer of List the four eligibility requirements for a...

Question 7

The City of Westboro passed an appropriations ordinance for the year ended June 30,2015. Included in the appropriations ordinance was an appropriation for public safety in the amount of $7,600,000. During the month ended July 31,2014 the following transactions took place:
a.Purchase orders were issued in the amount of $410,000.
b.Goods were received,related to purchase orders in the amount of $220,000,along with invoices amounting to $215,000.
c.Salaries were paid in the amount of $450,000
d.Because of an economic slowdown,a budget amendment was passed cutting all departments' (annual)appropriations by 4%.
Required:
Compute the amount of appropriations available at July 31,2014.

Accepted Answer

The answer of The City of Westboro passed an appropriations...

Question 8

At what point would the General Fund account "Budgetary Fund Balance -- Reserve for Encumbrances" be debited?

Accepted Answer

The General Fund account "Budgetary Fund Balance -- Reserve for Encumbrances" is debited when an authorized liability is incurred, meaning when the government receives the order. This represents the amount of funds set aside for outstanding purchase orders or contracts that have been authorized but not yet paid. Choice A is incorrect because simply ordering an item does not represent an incurred liability. Choice C is incorrect because cash payment to the vendor represents an actual outflow of funds which would reduce the "Budgetary Fund Balance -- Reserve for Encumbrances" account. Choice D is close, but not entirely correct, as the debiting of the account depends solely on the incurrence of the liability and not whether there are authorized appropriations.

Question 9

What is the difference between an exchange and a nonexchange transaction?

Accepted Answer

The answer of What is the difference between an exchange...

Question 10

Which of the following results in a decrease in fund balance on a governmental fund's Balance Sheet?

Accepted Answer

Expenditures reduce the fund balance by using up resources, while transfers received increase the fund balance. Encumbrances do not directly affect the fund balance as they represent reservations of funds for future expenditures. Therefore, only option A (Expenditures) results in a decrease in fund balance.

Question 11

Define the term "Revenue" and distinguish between that term and "Other Financing Sources."

Accepted Answer

The answer of Define the term "Revenue" and distinguish between...

Question 12

To record the budget for the General Fund

Accepted Answer

The journal entry would be a debit to Estimated Revenue Control and Estimated Other Financing Sources Control and a credit to Appropriations control and Estimated Other Financing uses Control. Fund Balance would be debited or credited as needed.

Question 13

What are the four classes of nonexchange revenues?

Accepted Answer

The answer of What are the four classes of nonexchange...

Question 14

The City of Fairport adopted the following budget for fiscal year 2015:
  In addition,the City reported the following actual amounts for the same fiscal year.
  Required:
 Prepare a budgetary comparison schedule for the City for the year ended December 31,2015 assuming the fund balance of the General Fund (budgetary basis)was $627,000 at January 1,2015. No "original budget" column is required. Include a "variance" column.

Accepted Answer

The answer of The City of Fairport adopted the following...

Question 15

At year-end,the balance of Expenditures,Revenues and Other Financing Sources and Uses accounts are closed to:

Accepted Answer

At year-end, the balances of Expenditures, Revenues, and Other Financing Sources and Uses accounts are closed to Fund Balance. This is because Fund Balance represents the excess of assets over liabilities and is a measure of the overall financial health of the governmental fund. It includes amounts that have not been spent from prior-year appropriations, as well as any surplus of revenue over expenditures for the current year.

Question 16

Distinguish between the Encumbrances Control account and the Budgetary Fund Balance -- Reserve for Encumbrances account

Accepted Answer

The answer of Distinguish between the Encumbrances Control account and...

Question 17

The Village of Lake George's General Fund has the following net resources at December 31,2015
• $5,000 of prepaid insurance
• $ 25,000 of property taxes receivable - currently due and expected to be collected within 60 days
• $300,000 rainy day fund approved by the township governing board
• $82,500 of supplies inventory
• $33,000 government grant for city park maintenance
• $10,000 contractual obligations for the purchase of park fixtures
• $200,000 to be used to fund government operations in the future
Required:
 Prepare the fund balance section of the Balance Sheet

Accepted Answer

The answer of The Village of Lake George's General Fund...

Question 18

Briefly discuss how governmental budgeting differs from budgeting for businesses.

Accepted Answer

The answer of Briefly discuss how governmental budgeting differs from...

Question 19

What are the revenue and expenditure recognition criteria under modified accrual accounting?
 Include in your answer specifically the recognition of property tax revenue.

Accepted Answer

The answer of What are the revenue and expenditure recognition...

Question 20

Define the term "Expenditure" and distinguish between that term and each of the following terms:
1.Expense
2.Disbursement
3.Encumbrance

Accepted Answer

The answer of Define the term "Expenditure" and distinguish between...

Quiz 3: Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority