What Is the Correct Debit or Credit for the Following

question 149

Multiple Choice

What is the correct debit or credit for the following scenario: A contract was issued for the major part of work to be done by a private contractor for the amount of $1,200,000?

• A) Debit: Budgetary Fund Balance -- Reserve for Encumbrances.
• B) Debit: Construction expenditures.
• C) Credit: Cash.
• D) Debit: Encumbrances.

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Definitions:

Income Statements

An income statement is a financial document summarizing a company's revenues, expenses, and profits over a specified period.

Perpetual Inventory System

An inventory management method where inventory levels are updated in real time with each sale or purchase transaction.

Gross Method

A method of recording purchases at the gross invoice amount before deducting any cash discounts.

Adjusted Trial Balance

A trial balance prepared after adjusting entries are made, used to verify the balance of debits and credits before generating financial statements.