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

question 69

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. Per its contractual arrangement, the city's required contribution to the State Pension Plan for the fiscal year ended 6/30/18 is $5 million. Due to cash inflow shortages the city, which budgeted $5 million for pension contributions, paid only $4 million in the fiscal year ended 6/30/18. The city paid the remaining amount on September 30, 2018. Assuming the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements, how should the city record the pension contribution and any associated liability for the year ended 6/30/18?

• 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.

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