The City of Brownsville had a balance in the Budgetary Fund Balance -- Reserve for Encumbrances account at the end of 2011 in the amount of $30,000.During 2012,all purchase orders related to the $90,000 were filled,and the invoice amount was $91,200.Which of the following would be true regarding the Statement of Revenues,Expenditures,and Changes in Fund Balances for 2012? (assume encumbrances do not lapse)

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The Budgetary Fund Balance -- Reserve for Encumbrances account is used to reserve funds for purchase orders that have been placed but not yet filled at the end of a fiscal year. Since encumbrances do not lapse, the entire $90,000 would be considered an expenditure in 2012, even though the invoice amount was $91,200. Therefore, the amount shown for Expenditures would include the $91,200. Choice A is incorrect because it only includes the overage amount and not the entire expenditure. Choice B is incorrect because it does not include the overage amount. Choice D is incorrect because it implies that orders placed in 2011 would not be included in the expenditures for 2012, which is not true.

The City of Brownsville Had a Balance in the Budgetary