The Encumbrances Method of Budgetary Reporting

question 25

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 expenditures.
• D) Is always required by GAAP.

---

Definitions:

Supply Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity supplied by producers.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.

Producer Surplus

The difference between the amount producers are willing to sell their goods for and the actual amount they receive due to higher market prices.

Consumer Surplus

The gap highlighting the difference between the sum consumers intend to pay and what they actually fork out for a good or service.