The City of Lakeview Adopts Its Budget on a Basis

question 37

Multiple Choice

The City of Lakeview adopts its budget on a basis of accounting that permits outstanding purchase commitments to be charged against the budget in the year that the goods are ordered instead of in the year they are received.During the year the city ordered and received $4,000 of supplies (of which $3,000 had been paid and $1,000 was unpaid) and had $500 of outstanding purchase commitments for supplies at year-end.In the budget-to-actual comparison, the expenditures for supplies would be:

• A)$3,000.
• B)$3,500.
• C)$4,000.
• D)$4,500.

---

Definitions:

Utility Possibilities Frontier

A graphical representation showing all the possible combinations of two goods that two countries (or agents) can efficiently produce using all of their resources.

Marginal Rates

The amount of change in a variable (often related to costs or taxes) associated with a one-unit change in another variable.

Utility Functions

Mathematical representations describing the level of satisfaction or utility that a consumer derives from consuming a good or combination of goods.

Equilibrium

A state of balance in a market, where demand equals supply, and economic forces are at rest.