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:

Building Depreciation

The systematic allocation of the cost of a building over its useful life to account for the decrease in its value over time.

Square Feet

A measurement unit for area, commonly used in real estate, equal to the area of a square with sides of one foot.

Indirect Expense

refers to expenses that are not directly associated with the production of goods or services, such as utility costs, rent, and administration salaries.

Gross Profit

The difference between revenue and the cost of goods sold, representing the basic profitability of a company's products or services.