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

question 41

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 6/3/11 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 the government-wide 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.

Analyze the effects of various transactions on the accounting equation.

Identify the role of owner's withdrawals and their impact on owner's equity.

Recognize how revenue is earned and reported in financial statements.

Distinguish between different types of transactions, including those that are not considered business transactions.

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Definitions:

Decoding

The process of having the receiver take a set of symbols, the message, and transform them back to an idea during the communication process.

Communication Channel

The medium through which a message is transmitted from the sender to the receiver, such as email, telephone, or social media.

Promotional Mix

The combination of one or more communication tools used to: (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product.

Direct Marketing

A promotional alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.