Multiple Choice: Governmental Accounting

3-2

1. Upon ordering supplies a government should
a. Debit encumbrances and credit reserve for encumbrances
b. Debit reserve for encumbrances and credit encumbrances
c. Debit expenditures and credit encumbrances
d. Debit expenditures and credit vouchers payable

2. Upon receiving supplies that had previously been encumbered a government should
a. Debit reserve for encumbrances and credit encumbrances
b. Debit fund balance and credit reserve for encumbrances
c. Debit fund balance and credit expenditures
d. Debit reserve for encumbrances and credit expenditures

3. Upon closing the books at year-end a government should
a. Debit fund balance and credit reserve for encumbrances
b. Debit encumbrances and credit reserve for encumbrances
c. Debit fund balance and credit encumbrances
d. Debit reserve for encumbrances and credit encumbrances

4. A government requires that all appropriations lapse at the end of a year. At the end of Year 1 that government
has $100,000 of goods and services on order. At the start of Year 2 the government should
a. Debit fund balance and credit encumbrances
b. Debit reserve for encumbrances and credit encumbrances
c. Debit encumbrances and credit reserve for encumbrances
d. Debit encumbrances and credit fund balance

5. Which of the following accounts would a government be most likely to debit as part of its year-end closing process?
a. Appropriations, encumbrances, and estimated revenues
b. Estimated revenues, appropriations, and reserve for
b. Estimated revenues, appropriations, and reserve for encumbrances
c. Revenues, appropriations, and encumbrances
d. Revenues, appropriations, and fund balance

6. A government places an order for a particular item of equipment and encumbers $5,500. The item arrives accompanied by an invoice for $5,200. The entries that the government should make should include (but not necessarily be limited to):
a. A debit to expenditures for $5,200, a debit to fund balance for $300, and a credit to reserve for encumbrances
for $5,500
b. A debit to expenditures for $5,200, a credit to encumbrances for $5,200, and a credit to accounts
payable for $5,200
c. A debit to expenditures for $5,200, a credit to encumbrances for $5,500, and a credit to accounts
payable for $5,200
d. A debit to expenditures for $5,200, a credit to reserve for encumbrances for $5,200, and a credit
to accounts payable for $5,200

7. A primary virtue of an object classification budget is that it
a. Covers a period of more than one year
b. Facilitates control by establishing detailed spending mandates
c. Shows the impact on the budget of various possible levels of output
d. Relates inputs to measurable outcomes

8. Per GASB Statement No. 34, governments must
a. Prepare a general fund budget on a cash basis
b. Prepare a general fund budget on amodified accrual basis
c. Prepare a schedule that reconciles any differences between amounts reported on a GAAP basis and a
budgetary basis
d. Prepare a schedule that reconciles any differences between the original budget and the amended budget

9. The amount that a government has available to spend would be indicated by
a. Encumbrances minus the sum of appropriations, expenditures, and net adjustments
b. Reserve for encumbrances plus appropriations minus the sum of expenditures and net adjustments
c. Appropriations plus encumbrances minus the sum of expenditures and net adjustments
d. Appropriations minus the sum of expenditures, encumbrances, and net adjustments

10. For which of the following funds would a government be least likely to record its annual budget and thereby
integrate it into its accounting system?
a. General fund
b. Special revenue fund
c. Capital project fund
d. Enterprise fund