Which Statement Is Not Correct

question 1

Multiple Choice

Which statement is not correct?

• A) Governmental funds account for expenditures of financial resources rather than matching revenues and expenses.
• B) The Encumbrances Outstanding account should be reversed and closed at the end of a fiscal year.
• C) Revenues from licenses and permit fees are recognized when received in cash if using the modified accrual basis of accounting for governmental funds.
• D) A fund is an independent accounting entity composed of cash and other financial resources, segregated for the purpose of carrying on specific activities and objectives.
• E) Commitments for purchase orders are recorded as expenses.

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Definitions:

Government Expenditures

The total amount of money spent by the government on various services and projects, including healthcare, education, and infrastructure.

Major Expenditure

Large financial spending, often on significant items or services, that represents a considerable portion of an entity's budget.

Sales Tax

A tax imposed by governments on the sale of goods and services, added to the retail price.

Tax Freedom Day

The day of the year when a nation as a whole has theoretically earned enough income to pay its taxes for the year.