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:

Cross Elasticity of Demand

A measure of how the quantity demanded of one good changes in response to a price change in another good.

Substitutes

Goods or services that can replace each other in usage, offering alternative choices to consumers.

Complements

Goods or services that are used together, where the use of one increases the demand for the other.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding all other factors constant.