A Governmental Entity Has Formally Integrated the Budget into Its

question 42

Multiple Choice

A governmental entity has formally integrated the budget into its accounting records and uses encumbrance accounting. During the year the government ordered but had not yet received a new police car. What effect will this event have on the unencumbered balance in the account "Expenditures-capital outlay, police department"?

• A) The balance in the account will not be affected until the police car is received.
• B) The balance in the account will be increased.
• C) The balance in the account will be decreased.
• D) Purchase orders never affect any budgetary account balances.

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Definitions:

GDP

Stands for Gross Domestic Product, which measures the total value of all goods and services produced over a specific time period within a country's borders.

Deficit Spending

The practice of a government spending more money than it receives in revenue over a specific period, typically financed through borrowing.