computer and the actual cost of the computer in the current year is $14,000. How

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computer and the actual cost of the computer in the current year is $14,000. How does this afferct unassigned fund balance? 18. Assume encumbrances do not expire at year-end. $16,000 was encumbered during the prior year for a A. Previous Year increase $16,000; Current Year decrease $14,000 B. Previous Yeur decrease $16,000, Current Year: increase $2,000 C. Previous Year no effect; Current Year decrease $14,000 D. Previous Year: decrease $16,000, Current Year: decrease 14,000 Department of a given city received an appropriation in the amount of $15,000,000 for the fiscal year ended June 30, 2015. During the month ended July 31, 2014, the following transactioni occurred: (a) purchase above, were filled in the amount of $610,000; the related invoice amount was $595,000; invoices were orders were issued in the amount of $650,000; (b) purchase orders, related to (a) uid in the amount of $550,000; (e) salaries were accrued aund paid in the amount of $600,000. The balance available for the fire department as of July 31, 2014 s A $13,740,000, B. $13,765,000. C $13,800,000. D. $13,840,000. 20. Which of the following is true with respect to Special revenue funds? A. Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed as to expenditure for purposes other than debt service or capital projects B. Special revenue funds are used when it is desirable to provide separate reporting of resources that are designated for specific parposes, C. Special revenue funds are used when it is desirable to provide separate reporting for furds provided by other governments to support capital projects D. Both B and C 21. At year end, the baliance of Expenditures, Revenues and Other Financing Sources and Uses accounts are closed to: A. Budgetary Fund Balance B. Expenses C. Fund Balance D. Expenditure Control 22. The journal entry to record the hudget of a Special Revenue Furd would include: A. A debit to appropriations Control B. A dehit to Estimated Revenues Control C. A credit to Estimated Revenues Control D. None of the above, Special Revenue Funds do not record budgets 23, Which of the folowing is correct with respect to accounting for supplies inventories in a govermmental fund? A. Supplies inventories may be recorded using either the parchase method or the consumption method B. An amount equal to the ending balance of supplies is reported as Nonspendable Fund Balance C. The consumption method is preferable over the purchase method since it requires no adjustment to supplies expense when preparing the government-wide statements D. All of the above are correct 41Page

Explanation / Answer

Hello mate,

18) Correct answer: B

Explanation:Encumbrances are the amounts mentioned by an entity which they were willing to spend for a purpose, and which they still intend to spend in next year, when the amount is not getting expired at the year end. If a company has decided "X" as its fund amount, and its actual spending is "A" & expected spending (encumbrance amount) s "B", then remaining fund budget becomes eq X-A-B. Which means, the encumbrance amount is taken out of fund as if it has already been spent, however, it is not spent in actual but will be spent in later stage.

Here, in this case, the amount shown as $16,000 has been kepy as encumbrance in previous year. Which means, in previous year, company allocated $16,000 to encumbrance amount. If the company had assigned "X" as its fund budget, then the amount of $16,000 will be removed from fund amount. So, in previous year, the fund amount will be decreased by $16,000.

Now, as encumbrance amount is $16,000 carried over current year, it means company can spend maximum $16,000 over a computer. As the actual spending of computer is $14,000, so $2000 will remain in encumbrance amount. However, as question clearly states that the encumbrance budget is only to purchase compnuter, so this remaining $2000 will go back to fund. So, remaining fund amount will be increased by $2000.

So, correct answer is B: Previous year: decrease $16000 and current year: increase $2000.

19) Correct answer: B

Here, available appropriation for Fire department in amount: $15,000,000

a) Booked purchase order amount: $650,000.

b) Out of order amount $650,000, received material is of amount $610,000, but its market value (or invoice value) is $595,000. So, payment needs to be done of $595,000.

c) Salaries were accrued and paid of amount $600,000.

Based on above facts, we can see that, they are still to receive material of amount $650,000 - $610,000 = $40,000.

So, gathering above figures for which amounts have been paid or to be paid are: $595,000 + $600,000 + $40,000 = $1,235,000.

The balance available for fire department is: $15,000,000 - $1,235,000 = $13,765,000.

Correct answer is B: $13,765,000

20) Correct answer: B

According to Governmental Accounting Standards Board, the Special Revenue Funds are those funds which are taken from specific revenue sources and to be spend for any spcific purpose except "Debt service" or "Capital projects"., which rules out our options C and D.

The purpose of spending this amount should be very specific. For example, if the Government has specified $10,000,000 for Police department upgradation purpose, then the same amount can not be used for library maintenance purpose. So, the puepose of spending needs to be very specific. If you check option A, it does not state the word SPECIFIC. Which means, it can be used for any purpose, which is wrong according to the definition of Special Revenue Funds. It rules out option A.

So, correct answer is B.

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