[levhelm]

Can somebody please help me understand the difference between these two questions? Don’t they contradict each other? I don’t understand why GASB Statement No. 54 applies to one of them, but not the other. Maybe I am missing something. Thanks!

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QUESTION 1:

A Capital Projects Fund has outstanding encumbrances of $250,000 as of the end of the fiscal year. Assume that all resources in the Capital Projects Fund are considered to be committed due to the constraints established by the enabling legislation of the governing body of the government. How should the encumbrances be reported in the year-end external financial statements?

A. As a specific identifiable component of the restricted fund balance.

B. As a specific identifiable component of the committed fund balance.

C. As a specific identifiable component of the Assigned Fund balance.

D. The encumbrances would only be reported in the note disclosures.

Answer: D. (CPAexcel explanation says this is because of GASB Statement No. 54.)

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QUESTION 2:

For state and local governmental units, generally accepted accounting principles typically require that encumbrances outstanding at year’s end be reported as

A. Expenditures.

B. Assigned or committed fund balance.

C. Deferred liabilities.

D. Current liabilities.

Answer: B. (CPAexcel explanation does NOT refer to GASB Statement No. 54.)

Passed