 Question 1

2 out of 2 points
Property taxes levied on the citizens of the Hill County would most appropriately be
budgeted in which of the following budgets?
Selected Answer:  
a. Operating budget
Correct Answer:  
a. Operating budget
 Question 2
2 out of 2 points
Which of the following is a primary benefit of a performance budget?
Selected  
Answer:
b. It encourages accomplishment of objectives by associating expenditures
with outcomes.
Correct  
Answer:
b. It encourages accomplishment of objectives by associating expenditures
with outcomes.
 Question 3
0 out of 2 points
Periodic allocations of funds to departments or agencies are generally called
Selected Answer:  
b. II and III
Correct Answer:  
c. I, II and
III
 Question 4
2 out of 2 points
Which of the following bases of accounting has been established by GASB for use in the
preparation of the general fund budget?
Selected Answer:  
d. None of the above.
Correct Answer:  
d. None of the above.
 Question 5
2 out of 2 points
A governmental entity has formally integrated the budget into its accounting records and uses
encumbrance accounting. During the year the government ordered but had not yet received a
new police car. What effect will this event have on the unencumbered balance in the account
“Expenditures—capital outlay, police department”?
Selected  
Answer:
a. The balance in the account will not be affected until the police car is
received.
Correct Answer:  
a. The balance in the account will not be affected until the police car is
received.
 Question 6
2 out of 2 points
A public school district formally adopted a budget with estimated revenues of $800 and
approved expenditures of $780. Which of the following is the appropriate entry to record the
budget?
Selected  
Answer:
a. Debit Estimated revenues $800; Credit Appropriations $780; Credit Fund
balance $20.
Correct  
Answer:
a. Debit Estimated revenues $800; Credit Appropriations $780; Credit Fund
balance $20.
 Question 7
2 out of 2 points
A university that formally integrates the budget in the accounting system and uses
encumbrance accounting orders some new computers that will cost approximately $20,000.
To recognize this event the university should make which of the following entries?
Selected Answer:  
b. Debit Encumbrances $20,000; Credit Reserve for encumbrances $20,000
Correct Answer:  
b. Debit Encumbrances $20,000; Credit Reserve for encumbrances $20,000
 Question 8
2 out of 2 points
A city received supplies that had been previously encumbered. The supplies were
encumbered for $5,000 and had an actual cost of $4,900. To recognize this event the county
should make which of the following entries?
Selected  
Answer:
a. Debit Reserve for encumbrances $5,000 and Supplies $4,900; Credit
Encumbrances $5,000 and Vouchers payable $4,900.
Correct  
Answer:
a. Debit Reserve for encumbrances $5,000 and Supplies $4,900; Credit
Encumbrances $5,000 and Vouchers payable $4,900.
 Question 9
0 out of 2 points
To close Reserve for encumbrances at the end of the year which of the following entries
should be made?
Selected Answer:  
b. Debit Reserve for encumbrances; Credit Encumbrances.
Correct Answer:  
d. No closing entry needed.
 Question 10
2 out of 2 points
When Spruce City receives goods at a cost of $9,700 that were encumbered in the prior year
for $10,000, which of the following entries are required (assume that encumbrances lapse at
year end)?
Selected  
Answer:
b. Debit Expenditures $9,700 and Reserve for encumbrances $10,000; Credit
Accounts payable $9,700 and Encumbrances $10,000.
Correct  
Answer:
b. Debit Expenditures $9,700 and Reserve for encumbrances $10,000; Credit
Accounts payable $9,700 and Encumbrances $10,000.
 Question 11
2 out of 2 points
Lincoln County uses encumbrance accounting to control expenditures. It charges the cost of
outstanding purchase commitments to expenditures in the year they are ordered, not in the
year they are received. If the county had $7,000 of purchase commitments outstanding at the
end of Year 1 and received those goods during Year 2 at a cost of $7,800, what would be the
impact on total fund balance for Year 2?
Selected  
Answer:
a. Total fund balance at the end of Year 2 would be $7,800 less than at the
end of Year 1.
Correct Answer:  
a. Total fund balance at the end of Year 2 would be $7,800 less than at the
end of Year 1.
 Question 12
2 out of 2 points
Which of the following is the primary reason why governments formally integrate their
legally adopted budget into their accounting systems?
Selected  
Answer:
b. It allows continuous monitoring of revenues and expenses to compare to
budgets.
Correct Answer:  
b. It allows continuous monitoring of revenues and expenses to compare to
budgets.
 Question 13
2 out of 2 points
A review of Park City’s books shows the following information:
Selected Answer:  
b. $3,000
Correct Answer:  
b. $3,000
 Question 14
2 out of 2 points
Carolina City places an order for a specific item of equipment and encumbers $6,000 for that
item. The equipment arrives with an invoice for $5,700. Which of the following entries
should the city make upon receipt of the equipment?
Selected  
Answer:
b. A debit to expenditures for $5,700, a debit to reserve for encumbrances for
$6,000, a Credit to accounts payable for $5,700, and a Credit to encumbrances
for $6,000.
Correct  
Answer:
b. A debit to expenditures for $5,700, a debit to reserve for encumbrances for
$6,000, a Credit to accounts payable for $5,700, and a Credit to encumbrances
for $6,000.
 Question 15
2 out of 2 points
Carolina City places an order for a specific item of equipment and encumbers $6,000 for that item. The
equipment arrives with an invoice for $5,700. Which of the following entries should the city make upon receipt
of the equipment?

Selected  
Answer: A debit to expenditures for $5,700, a debit to reserve for encumbrances for $6,000, a Credit to
accounts payable for $5,700, and a Credit to encumbrances for $6,000.
Correct  
Answer: A debit to expenditures for $5,700, a debit to reserve for encumbrances for $6,000, a Credit to
accounts payable for $5,700, and a Credit to encumbrances for $6,000.