A Construction Contract Was Issued for an Addition to the County

question 129

Multiple Choice

A construction contract was issued for an addition to the county jail in the amount of $2,100,000.When the project was approximately half finished,the contractor submitted an invoice for payment of $1,050,000.Which partial entry below is not required to record this transaction?

• A) Credit Contracts Payable $1,050,000.
• B) Debit Construction Expenditures $1,050,000.
• C) Credit Encumbrances Control $2,100,000.
• D) Credit Encumbrances Control $1,050,000.

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Definitions:

Consumption Function

An economic formula representing the relationship between total consumption and gross national income, suggesting how income influences spending behavior.

Aggregate Demand Curve

A graphical representation that shows the total quantity of goods and services that all households, businesses, and government are willing to purchase at each possible price level.

Autonomous Spending

Expenditures in an economy that do not vary with the level of income or production, such as government spending or investment.

Marginal Propensity

The ratio of the change in an aggregate economic quantity to an adjustment in some causal variable, particularly the change in consumption resulting from a change in income.