How Would Purchase Orders and Contracts Be Reported Under Modified

question 50

Multiple Choice

How would purchase orders and contracts be reported under modified accrual accounting and accrual accounting?
Modified Accrual Accrual

• A) Expenditure No entry
• B) Encumbrance No entry
• C) Encumbrance Liability
• D) Expenditure Liability

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Definitions:

Financing Statement

A document filed to give public notice of a security interest in collateral, used to perfect a secured party's interest under the Uniform Commercial Code.

Real Estate Mortgage

A legal agreement where a borrower pledges real property to a lender as security for a loan used to purchase that property.

Financing Statement

A document filed by a creditor to indicate a security interest in the personal property of a debtor.

Constructive Notice

Legal concept indicating that a person should have known a fact because it was publicly available or recorded, even if they had no actual knowledge of it.