Question 38 Most budgets are prepared on a cash or modified cash basis. T F
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Question 38
Most budgets are prepared on a cash or modified cash basis.
T
F
Question 39
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)?
a. Debit Expenditures $9,700; Credit Vouchers Payable $9,700; no entry for Encumbrances.
b. Debit Expenditures $9,700 and Reserve for Encumbrances $10,000; Credit Vouchers Payable $9,700 and Encumbrances $10,000.
c. Debit Expenditures $10,000 and Reserve for Encumbrances $10,000; Credit Vouchers Payable $10,000 and Encumbrances $10,000.
d. Debit Reserve for Encumbrances $10,000; Credit Encumbrances $10,000; no entry for Expenditures.
Question 40
To close Reserve for Encumbrances at the end of the year which of the following entries should be made?
a. Debit Reserve for Encumbrances; Credit Fund Balance.
b. Debit Reserve for Encumbrances; Credit Encumbrances.
c. Debit Fund Balance; Credit Reserve for Encumbrances.
d. No closing entry needed.
Question 41
A public school district formally adopted a budget with estimated revenues of $500 and approved expenditures of $490. Which of the following is the appropriate entry to record the budget?
a. Debit Estimated Revenues $500; Credit Appropriations $490; Credit Fund Balance $10.
b. Debit Appropriations $490; Debit Fund Balance $10; Credit Estimated Revenues $500.
c. Debit Encumbrances $490; Debit Fund Balance $10; Credit Estimated Revenues $500.
d. Memorandum entry only.
Question 42
The accounting cycle for most governments is two to three years, consistent with the terms of elected officials.
T
F
Question 43
A governmental entity has formally integrated the budget into its accounting records. At year-end the ledger account Revenues from Property Taxes has a debit balance. Which of the following is the best explanation for the debit balance?
a. The entity overestimated property tax revenue when preparing its budget.
b. The entity underestimated property tax revenue when preparing its budget.
c. The entity collected more in property taxes than it anticipated.
d. There is no logical explanation; revenue accounts usually do not have debit balances.
Question 44
When budgets are integrated into a government s accounting system, estimated revenues are debited.
T
F
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
