A City Accounts for Its Capital Acquisitions Using Encumbrances

question 3

Multiple Choice

A city accounts for its capital acquisitions using encumbrances.When the city enters into a contract to acquire equipment,what journal entry should it make?

• A)debit expenditures - capital outlay;credit vouchers payable
• B)debit encumbrances;credit budgetary fund balance reserved for encumbrances
• C)debit equipment;credit vouchers payable
• D)debit encumbrances;credit appropriations - equipment

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