Accounting: Recording Issuance of Purchase Orders and Contracts

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What was the total amount of purchase orders and contracts issued by Johnson City?

$800,000

$650,000 (correct)

$600,000

$700,000

In the general journal entry provided, what account is credited?

Public safety

Encumbrance

Reserve for encumbrance (correct)

General government

What is the purpose of recording encumbrances?

To estimate future expenses

To calculate total revenue

To track budgeted amounts for goods and services ordered but not yet received (correct)

To record actual expenditures

If the goods and services are received in the subsidiary ledger exactly as recorded, what will be the total amount in the subsidiary ledger after receipt?

$650,000 Signup and view all the answers

Which ledger account specifically tracks encumbrances in the given scenario?

Reserve for encumbrance Signup and view all the answers

What is the purpose of creating a subsidiary ledger in this context?

To track detailed transactions related to specific departments or areas Signup and view all the answers

Where do resources of the General Fund and special revenue funds come from?

They are replenished for current operating purposes like salaries and supplies. Signup and view all the answers

How do special revenue funds differ from the General Fund in terms of existence?

Special revenue funds exist as long as there are resources dedicated to specific purposes. Signup and view all the answers

What type of resources are typically transferred to capital projects funds from the General Fund or special revenue funds?

Resources for significant amounts to be expended for large capital projects. Signup and view all the answers

Which accounts belong to the Balance Sheet account classification in governmental unit accounting?

Asset Accounts, Liability Accounts, and Fund Equity Accounts Signup and view all the answers

What is the main purpose of the General Fund account?

To exist throughout the government's life replenishing for current operating purposes. Signup and view all the answers

Which accounts fall under Operating Statement Accounts in governmental unit accounting?

Revenues and Expenditures Signup and view all the answers

What does GASBS 34 recommend in terms of providing budget to actual comparison schedules?

To provide them as required supplementary information (RSI) Signup and view all the answers

How are budgetary accounts integrated into the general ledgers of the General Fund and special revenue funds?

As legally binding requirements for administrators Signup and view all the answers

What is the purpose of a budgetary comparison statement according to GASBS 34?

To compare budgeted amounts with actual amounts Signup and view all the answers

In what format does GASBS 34 allow governments to report budgetary comparison information?

Part of the basic financial statements Signup and view all the answers

What type of funds are required by state laws to adopt a budget according to the text?

Special Revenue Funds only Signup and view all the answers

What schedule should follow immediately after the notes to the financial statements as per GASBS 34 recommendations?

Required Supplementary Information (RSI) schedule Signup and view all the answers

What is the main difference between payroll accounting in a governmental fund and a for-profit entity?

Expenditures are recorded in a governmental fund, while expenses are recorded in a for-profit entity. Signup and view all the answers

Why does the text mention that encumbrances are usually not recorded for recurring expenditures such as payroll?

Because payrolls involve a fixed amount each period and do not require encumbrances. Signup and view all the answers

In the provided illustration, what was the total amount of deductions from the gross pay of employees for the month of January 2008?

$49,518 Signup and view all the answers

What does FICA stand for in the context of payroll accounting mentioned in the text?

Federal Insurance Contribution Act Signup and view all the answers

When recording employer's payroll costs, which account is credited according to the text?

Liability for federal government Signup and view all the answers

What is credited when recording withholdings from employees' pay in payroll accounting as per the text?

Liabilities for withholdings Signup and view all the answers

In accounting for inter-fund transactions, quasi external transactions involve:

Recognizing revenues in the fund financing the provider department and expenditures in the fund financing the receiving department. Signup and view all the answers

If a car repair of $2,000 was done by the internal service fund (ISF) for which the general fund was responsible, what would be the correct journal entry?

GF: Expenditure $2,000, Due to ISF $2,000, ISF: Due from GF $2,000 Signup and view all the answers

What type of transactions are inter-fund loans?

Transactions where loans are made from one fund to another with intent to repay Signup and view all the answers

When a loan must be repaid during the current year or soon thereafter, how should the lending fund record it?

As a current receivable Signup and view all the answers

What should the borrowing fund record when receiving an inter-fund loan?

A current liability Signup and view all the answers

Which type of transactions involve sales and purchases of goods and services between two funds?

Quasi external transactions Signup and view all the answers