Multiple-Choice Questions on Budgets, Expenditures, and Revenue [AICPA Adapted]
Select the correct answer for each of the following questions.
1. Which of the following steps in the acquisition of goods and services occurs first?
a. Appropriation.
b. Encumbrance.
c. Budget.
d. Expenditure.
2. What account is used to earmark the fund balance to recognize the contingent obligations of goods ordered but not yet received?
a. Appropriations.
b. Encumbrances.
c. Obligations.
d. Fund Balance—Assigned for Encumbrances.
3. When the Estimated Revenues Control account of a governmental unit is closed out at the end of the fiscal year, the excess of estimated revenues over estimated appropriations is
a. Debited to Fund Balance—Unassigned.
b. Debited to Fund Balance—Assigned for Encumbrances.
c. Debited to Budgetary Fund Balance—Unassigned.
d. Credited to Fund Balance—Assigned for Encumbrances.
4. The Carson City general fund issued purchase orders of $630,000 to vendors for supplies. Which of the following entries should be made to record this transaction?
|
| Debit | Credit |
a. | Encumbrances | 630,000 |
|
| Budgetary Fund Balance—Assigned for Encumbrances |
| 630,000 |
b. | Expenditures | 630,000 |
|
| Vouchers Payable |
| 630,000 |
c. | Expenses | 630,000 |
|
| Accounts Payable |
| 630,000 |
d. | Budgetary Fund Balance—Assigned for Encumbrances | 630,000 |
|
| Encumbrances |
| 630,000 |
5. The following balances are included in the subsidiary records of Dogwood’s Parks and Recreation Department on March 31, 20X2:
Appropriations—Supplies | $7,500 |
Expenditures—Supplies | 4,500 |
Encumbrances—Supply Orders | 750 |
How much does the department have available for additional purchases of supplies?
a. $0.
b. $2,250.
c. $3,000.
d. $6,750.
6. The board of commissioners of the City of Elgin adopted its budget for the year ending July 31, 20X2, which indicated revenue of $1,000,000 and appropriations of $900,000. If the budget is formally integrated into the accounting records, what is the required journal entry?
a. Memorandum entry only
b. | Appropriations Control | 900,000 |
|
| Budgetary Fund Balance—Unassigned | 100,000 |
|
| Estimated Revenues Control |
| 1,000,000 |
c. | Estimated Revenues Control | 1,000,000 |
|
| Appropriations Control |
| 900,000 |
| Budgetary Fund Balance—Unassigned |
| 100,000 |
d. | Revenue Receivable | 1,000,000 |
|
| Expenditures Payable |
| 900,000 |
| Budgetary Fund Balance—Unassigned |
| 100,000 |
7. Which of the following accounts of a governmental unit is credited when the budget is recorded?
a. Encumbrances.
b. Budgetary Fund Balance—Assigned for Encumbrances.
c. Estimated Revenue Control.
d. Appropriations Control.
8. Which of the following accounts of a governmental unit is debited when supplies previously ordered are received?
a. Encumbrances.
b. Budgetary Fund Balance—Assigned for Encumbrances.
c. Vouchers Payable.
d. Appropriations Control.
9. Which of the following situations will increase the fund balance of a governmental unit at the end of the fiscal year? Appropriations are less than expenditures and budgetary fund balance is assigned for encumbrances.
f. Appropriations are less than expenditures and encumbrances.
g. Appropriations are more than expenditures and encumbrances.
h. Appropriations are more than estimated revenue.
10. Which of the following accounts of a governmental unit is credited to close it out at the end of the fiscal year?
a. Appropriations Control.
b. Revenue—Property Tax.
c. Budgetary Fund Balance—Assigned for Encumbrances.
d. Encumbrances.
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