The Encumbrances Method of Budgetary Reporting

question 24

Multiple Choice

The encumbrances method of budgetary reporting

• A) Is never allowed by GAAP.
• B) Never results in an outstanding encumbrance.
• C) Is where outstanding encumbrances are considered to be budgetary expenditures.
• D) Is always required by GAAP.

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Definitions:

Dividend

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.

Historical Constant Growth

A growth rate that assumes a constant rate of increase over time, often used in financial forecasting.

Present Value

Present value is a financial concept that involves determining the current worth of a future sum of money or stream of cash flows given a specific rate of return.

Second Class of Stock

A category of shares that have different rights and privileges than the primary class of stock in a company, often with different voting or dividend rights.