A Certain Federal Agency Placed an Order for Office Supplies

question 23

Multiple Choice

A certain federal agency placed an order for office supplies at an estimated cost of $14,400. Later in the same fiscal year these supplies were received at an actual cost of $14,800. Assume commitment accounting is not used by this agency. At the time the order is placed, what is the net effect on the budgetary and proprietary track accounts?

• A) Budgetary accounts: $14,400; Proprietary accounts: $14,400.
• B) Budgetary accounts: $14,400; Proprietary accounts: $0.
• C) Budgetary accounts: $14,400; Proprietary accounts: $14,800.
• D) Budgetary accounts: $0; Proprietary accounts: $0.

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's net income or losses.

Equity Income

Income that comes from owning shares in a company, typically in the form of dividends paid out from the company's profits.

Internal Accounting Records

Documentation and books kept by an organization for its internal financial planning, monitoring, and reporting.

Consolidated Balance Sheet

A financial statement that combines the assets, liabilities, and shareholders' equity of a parent company and its subsidiaries into one document.