Author Question: A city accounts for its capital acquisitions using encumbrances. When the city enters into a ... (Read 50 times)

dakota nelson · **on:** Jul 5, 2018

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

Question 2

The entry to close the appropriate insurance account at the end of the accounting period is
a. debit Income Summary; credit Prepaid Insurance
b. debit Prepaid Insurance; credit Income Summary
c. debit Insurance Expense; credit Income Summary
d. debit Income Summary; credit Insurance Expense