What Is the Appropriate Accounting for the Signing of a Contract

question 69

Multiple Choice

What is the appropriate accounting for the signing of a contract to build a new water treatment facility by an Enterprise Fund?

• A) Debit Encumbrances.
• B) Credit Budgetary Fund Balance - Reserve for encumbrances.
• C) No entry is required.
• D) Both A & B.

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Definitions:

Punishment

A consequence or penalty given for a perceived misbehavior or infringement, intended to reduce or eliminate that behavior.

Unpleasant Event

An occurrence that is undesirable or causes discomfort.

Decreasing

Refers to a reduction in size, quantity, or extent of something over a period.

Frequency

The rate at which a particular event or phenomenon occurs over a certain period or within a given sample.