When Is It NOT Appropriate to Use an Encumbrance System

question 20

Multiple Choice

When is it NOT appropriate to use an encumbrance system?

• A)When only a small part of expenditures for goods and services are discretionary.
• B)When there is a significant lag between purchase orders and the receipt of goods.
• C)When reporting is done on a yearly basis.
• D)When commitments are made on a decentralized basis.

Appreciate the importance and implications of reclassification and presentation adjustments post-reporting date.

Comprehend the criteria for classifying operating cycles and the impact on financial statement presentation.

Understand the principles and conditions for revenue recognition.

Grasp the methods of recording transactions involving revenue.

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Definitions:

Denial

A psychological defense mechanism where a person refuses to accept reality or facts, thereby avoiding a potentially distressful situation.

Kubler-Ross's Typology

A model describing five stages of emotional response to grief and loss, namely denial, anger, bargaining, depression, and acceptance.

Refusing

involves the act of saying no or denying a request, offer, or demand.

Intergenerational Ambivalence

Contradictions that arise both from kinship roles and personal emotions.