A Construction Contract Was Issued for an Addition to the County

question 32

Multiple Choice

A construction contract was issued for an addition to the county jail in the amount of $2,300,000. When the project was approximately half finished, the contractor submitted an invoice for payment of $1,150,000. Which partial entry below is not required to record this transaction?

• A) Credit Contracts Payable $1,150,000.
• B) Debit Expenditures - Capital Outlay $1,150,000.
• C) Credit Encumbrances Control $2,300,000.
• D) Credit Encumbrances Control $1,150,000.

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Definitions:

Loanable Funds

The market model representing the supply and demand for loans, where the interest rate is determined.

Demand

The desire of purchasers to buy a certain good or service, backed by the ability and willingness to pay a specific price.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the real yield to savers.

Loanable Funds

The supply of funds available for borrowing in the financial markets, impacting interest rates.