Culver City Recognizes as Revenues/expenditures Those Amounts Collected/paid During the Year

question 53

Multiple Choice

Culver City recognizes as revenues/expenditures those amounts collected/paid during the year or within 60 days of fiscal year-end.The City offers a pension benefit to its employees who meet certain age and years of employment criteria.The City participates in the State Pension Plan.The City's actuarially determined contribution requirement to the State Pension Plan for the fiscal year ended 6/30/11 is $5 million.Due to cash inflow shortages the City, which budgeted $5 million for pension payments, paid only $4 million in the fiscal year ended 6/30/11.The City paid the remaining amount on September 30, 2011.Assuming the City maintains its books and records in a manner that facilitates the preparation of its fund financial statements, what is the appropriate entry to record the pension payments and recognize any associated liability?

• A)Debit Expenditures $5 million; Credit Cash $4 million and Pension payable $1 million.
• B)Debit Expenses $5 million; Credit Cash $4 million and Pension payable $1 million.
• C)Debit Expenditures $4 million; Credit Cash $4 million.
• D)Debit Expenses $4 million; Credit Cash $4 million.

Understand customer and supplier bargaining power within an industry.

Identify and evaluate the impact of substitutes on industry competition.

Understand the factors contributing to the profitability of different industries.

Comprehend the concept of economies of scale and network effects in market dynamics.

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Definitions:

Net Proceeds

The final amount of money received from a transaction after deducting all associated costs and expenses.

Commission

A fee paid to an agent or employee for transacting a piece of business or performing a service, typically a percentage of the sales or services sold.

Consignment

The process of providing goods to a third-party retailer who pays the supplier only for the merchandise sold, not for unsold inventory.

Total Gross Pay

The total amount of money earned by an employee before any deductions or taxes are applied.