1. Define the term revenue and distinguish between that term and other financing sources.
2. Distinguish between the Encumbrances account and the Reserve for Encumbrances account.
3. Define the term expenditure and distinguish between that term and each of the following terms:
4) Other financing use
4. Describe the difference between exchange and nonexchange transactions and discuss the rules for recognition of revenues and expenses/expenditures for each type of transaction.
1. Revenue is defined as increases in fund financial resources other than from interfund transfers and debt issue proceeds. Other Financing Sources are increases in fund financial resources from interfund transfers and debt issue proceeds.
2. The Encumbrance control account is a budgetary account with a debit balance. Accounts subsidiary to this control account are kept in accord with the same account classifications used for appropriations. The balance of the Reserve for Encumbrances account (a "real" not temporary) should always be equal to the balance of the Encumbrances control account but is a credit balance, since it represents a reservation of Fund Equity in the amount of the estimated liability for outstanding purchase orders, contracts, and other commitment documents.
3. Expenditures are defined by the GASB as decreases in fund financial resources other than through interfund ...
Using the textbook, Accounting for Governmental and Nonprofit Entities 13/e by Wilson and Kattelus, the questions were answered from a teacher's perspective. Each answer also has an explanation to help clarify the answer itself.