Assume Encumbrances Do Not Expire at Year-End

question 67

Multiple Choice

Assume encumbrances do not expire at year-end. $15,000 was encumbered during the prior year for a computer and the actual cost of the computer in the current year is $12,000. How does this affect unreserved fund balance?

• A) Previous Year: increase 15,000; Current Year: decrease 12,000
• B) Previous Year: decrease 15,000; Current Year: increase 3,000
• C) Previous Year: no effect; Current Year: decrease 12,000
• D) Previous Year: decrease 15,000; Current Year: decrease 12,000

---

Definitions:

Classical Economists

Economists from the 18th and 19th centuries who advocated for free markets, minimal government intervention, and believed in the theory of self-regulating economies.

Quantity of Money

The total amount of money in circulation or in existence within an economy at a given time.

Interest Rate

The price, in terms of a percentage of the principal, a borrower incurs from a lender to utilize assets.

Hyperinflation

Runaway inflation; in the United States, double-digit inflation.