Answered: 4. An encumbrance represents the…

4. An encumbrance represents the estimated future liability for goods or services resulting from placing a purchase order or signing a contract. True or False

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 3CYBK

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An encumbrance represents the estimated future liability for goods or services resulting from placing a purchase order or signing a contract.

True or False

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An encumbrance represents the estimated future liabilities for goods or services resulting from placing a purchase order or signing a contract. a. True b. False
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Determine if this shall result in recognition of liabilities 9. receipt of goods to be sold for the account of consignor a. yes b. no
Which of the following is most likely to result in the recognition of a liability? a. Customers become entitled to rebates for their past purchases. b. Intention to acquire inventories in a future period. c. Entering into a purchase contract for future delivery. d. Agreeing on an irrevocable future commitment that is not burdensome at present.
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Under PFRS 15, what is the specific point in time when the consignor satisfies is performance obligation under consignment contract? a. upon sale of consigned goods by consignee to final consumers b. upon signing of contract of consignment by consignor and consignee c. upon remittance of cash by consignee to consignor d. upon delivery of consigned goods by consignor to consignee
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