What is the appropriate accounting for the signing of a contract to build a new water treatment facility by an Enterprise Fund?

Question

Quizplus · Accepted Answer

No entry is required for the signing of a contract to build a new water treatment facility by an Enterprise Fund. This is because Enterprise Funds use accrual accounting, and no expenditure has been incurred until work on the facility actually begins. Until that time, the signing of the contract does not affect the financial statements.

What Is the Appropriate Accounting for the Signing of a Contract