Note: This Is a Kaplan CPA Review Question

question 30

Multiple Choice

Note: This is a Kaplan CPA Review Question
When the budget of a governmental unit, for which the estimated revenues exceed the appropriations, is adopted and recorded in the general ledger at the beginning of the year, the budgetary fund balance account is

• A) Credited at the beginning of the year and debited at the end of the year.
• B) Credited at the beginning of the year and no entry made at the end of the year.
• C) Debited at the beginning of the year and no entry made at the end of the year.
• D) Debited at the beginning of the year and credited at the end of the year.

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Definitions:

Annually Compounded

An investment or interest calculation method where the interest earned over the year is added to the principal at year-end, affecting the amount earned the following year.

Nominal Rate

The nominal rate refers to the interest rate stated on a loan or investment agreement before adjusting for inflation or other factors.

Annually Compounded

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, once per year.

Nominal Interest Rate

The interest rate before adjustments for inflation or other factors that affect the real value of money.