Which of the statements regarding the accounting for encumbrances is false?
a. The budgetary entry to record an encumbrance would be a CREDIT to Encumbrances and a DEBIT to Reserve for Encumbrances.
b. The budgetary entry to record an encumbrance would be a DEBIT to Encumbrances and a CREDIT to Reserve for Encumbrances.
c. If the actual cost of a purchase exceeds the amount of the original encumbrance, the original encumbrance is still reversed at the original amount.
d. The recording of an encumbrance is considered to be a budgetary entry.
Question 2
The basic difference between manufacturing and merchandising companies is the completion level of the productsthey purchase for resale to customers.
a. True
b. False
Indicate whether the statement is true or false
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