Use the Following Information to Answer Questions Sick Leave Vests

question 36

Multiple Choice

Use the following information to answer Questions Sick leave vests at the completion of the fifth year of employment, and unused sick leave is paid in cash upon termination or retirement. During the fiscal year ended 6/30/18, city employees who are paid from the general fund earned $2.8 million of sick leave, of which $1.0 was taken. Of the balance, the city estimates that $0.2 million will be taken in the next 60 days, $0.6 million will be taken in the next five years, $0.4 million will vest, and $0.6 million will never be taken.
-The amount of sick leave liability that should appear on the government-wide financial statements at 6/30/18 is

• A) $1.2 million.
• B) $0.4 million.
• C) $0.2 million.
• D) No liability should appear.

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Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a specific period.

Unit Product Cost

The total cost to produce one unit of a product, including direct materials, direct labor, and manufacturing overhead.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, highlighting net profit or loss.

Variable Costing

An accounting method that only considers variable costs (costs that vary with production volume) in determining product costs and profitability.