How Should Outstanding Commitments Best Be Presented in the Financial

question 9

Multiple Choice

How should outstanding commitments best be presented in the financial statements of non- for-profit organizations that use encumbrance accounting?

• A) The encumbrance should be reported as an expense and the estimated commitment as a liability.
• B) The encumbrances should be reported as a deferred asset and the estimated commitment as a liability.
• C) The estimated commitment should be reported as a liability with the encumbrance deducted from it on the face of the statement of financial position.
• D) Neither the encumbrance nor estimated commitment should be included in the financial statements; if the commitment is sufficiently material, it could be disclosed in the notes to the financial statements.

Understand the concept and purpose of social regulation in promoting safety and harmony within the community.

Identify the consequences of violating antitrust laws, including monetary penalties and other penalties associated with such violations.

Comprehend the principles of deregulation and its impact on competition and pricing in industries.

Recognize the role of government in regulating natural monopolies and its effects on firm incentive and efficiency.

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Definitions:

Physical Space

The tangible, three-dimensional environment in which objects and events occur and interact.

Tight Cultures

Societies or organizations that have strict norms and a low tolerance for deviant behavior, leading to more uniformity in social conduct.

Uncertainty Avoidance

The degree to which a society tolerates risk and uncertainty.

Individualism

A theory in society that prioritizes individual freedom over the control of groups or the government.