Assume Encumbrances Do Not Expire at Year-End

question 87

Multiple Choice

Assume encumbrances do not expire at year-end. $16,000 was encumbered during the prior year for a computer and the actual cost of the computer in the current year is $14,000. How does this affect unassigned fund balance?

• A) Previous Year: increase $16,000; Current Year: decrease $14,000
• B) Previous Year: decrease $16,000; Current Year: increase $2,000
• C) Previous Year: no effect; Current Year: decrease $14,000
• D) Previous Year: decrease $16,000; Current Year: decrease 14,000

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Definitions:

Current Market Value

The present financial value of an asset or company based on its trading price in the market, subject to fluctuations.

Effective Yield

This is the total yield on an investment expressed on an annual basis, taking into account the compounding of interest.

Interest Rate

The annual rate at which interest is charged to the borrower, represented as a percentage of the still unresolved loan amount.

Payment Stream

A sequence of payments made over time, often associated with loans or investments.