The general fund of Hatteras acquired a fire truck during the fiscal year ended June 30,20X9.The purchase order for the fire truck was recorded on February 15,20X9.Hatteras' acquisition of the fire truck required which of the following sequences of accounting activities?
I.Appropriation
II.Encumbrance
III.Expenditure

Question

Quizplus · Accepted Answer

The acquisition of the fire truck requires the following accounting activities in the given sequence:
I. Appropriation - This is the process of setting aside funds for a particular purpose. The appropriation for the purchase of the fire truck would have been made before the purchase order was placed.
II. Encumbrance - This is the process of reserving funds for a specific purchase or expense. A purchase order would have been issued to reserve the funds for the fire truck purchase.
III. Expenditure - This is the actual payment for the purchase. The payment for the fire truck would have been made after the appropriation and encumbrance. Therefore, the correct sequence of accounting activities is I, II, III, which is represented by choice D.

The General Fund of Hatteras Acquired a Fire Truck During