Which of the Following Observations Concerning Encumbrances Is NOT True

question 23

Multiple Choice

Which of the following observations concerning encumbrances is NOT true?

• A) Their purpose is to ensure that the expenditures within a period do not exceed the budgeted appropriations.
• B) They provide a control system and safeguard for governmental unit administrators.
• C) They are a unique element of governmental accounting.
• D) They are recognized only at the time disbursements are made.

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Definitions:

Time Value

The theory that a sum of money is more valuable if it's available immediately, rather than the same amount in the future, because of its earning capabilities.

Interest Rate

The percentage of a loan amount charged by the lender to the borrower for the use of money, typically expressed on an annual basis.

Present Values

This concept calculates the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Annuity Payments

Regular fixed payments received from an investment over a specified period of time.