A city's General Fund general ledger includes accounts called Estimated Revenues, Appropriations, and Encumbrances. This indicates that the city
A. Formally integrates its budget into its accounts.
B. Uses a cash plus encumbrances basis of accounting.
C. Maintains its accounts on an accrual basis.
D. Erroneously reports encumbrances as expenditures.
Question 2
Ashley Woods Village paid 1,000,000 principal and 200,000 interest on its general obligation bonds that it issued to finance widening of a local thoroughfare. This transaction will most likely
A. Decrease fund balance in the Capital Projects Fund by 1,000,000
B. Decrease fund balance in the Capital Projects Fund by 1,200,000
C. Decrease fund balance in the Debt Service Fund by 1,000,000
D. Decrease fund balance in the Debt Service Fund by 1,200,000