The Following Related Entries Were Recorded in Sequence in the General

question 13

Multiple Choice

The following related entries were recorded in sequence in the general fund of a municipality: The sequence of entries indicates that

• A)an adverse event was foreseen and a reserve of $15,000 was created; later the reserve was cancelled and a liability for the item was acknowledged.
• B)an order was placed for goods or services estimated to cost $15,000; the actual cost was $15,350 for which a liability was acknowledged upon receipt.
• C)encumbrances were anticipated but later failed to materialize and were reversed.A liability of $15,350 was incurred.
• D)the first entry was erroneous and was reversed; a liability of $15,350 was acknowledged.

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Definitions:

Capacity Shortage

A situation where the demand for a company's output exceeds its production capacity.

Margin Reduction

The decrease in the difference between the selling price of a product and its cost, often due to increased costs or reduced selling prices.

Backup Source

An alternative or supplementary source, often used for data, power, or supply chain redundancy, to ensure continuity in the event of primary source failure.

Production Capacity

The maximum amount of goods or services that can be produced by a facility within a specific time frame under normal working conditions.