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Chapter 3 Issues of Budgeting and Control TRUE/FALSE (CHAPTER 3) 1. Capital budgets focus on plans for the acquisition and construction of fixed assets. 2. The accounting cycle for most governments is two to three years, consistent with the terms of elected officials. 3. Most budgets are prepared on a cash or modified cash basis. 4. Neither the GASB not the FASB set standards for budgetary accounting. 5. State and local governments must prepare their GAAP budgetary comparisons on the modified accrual basis of accounting. 6. When budgets are integrated into a governments accounting system, estimated revenues are debited. 7. Encumbrances and expenditures both reduce total fund balances of state and local governments. 8. Not-for-profit budgets focus first on revenues and secondarily on expenditures. 9. State and local governments budget to actual comparisons present both original and final budget amounts. 10. Cash-basis budgets help governments focus on interperiod equity. Granof Test Bank Chapter 3 Page 1 MULTIPLE CHOICE (CHAPTER 3) 1. Which of the following is NOT a function of a budget in the governmental environment? a) Planning. b) Organizing. c) Controlling. d) Evaluating. 2. For which of the following funds would flexible budgeting be most valuable? a) Special revenue fund. b) Capital project fund. c) Agency fund. d) Enterprise fund. 3. Property taxes levied on the citizens of the Hill County would most appropriately be budgeted in which of the following budgets? a) Operating budget. b) Capital budget. c) Flexible budget. d) All of the above. 4. Expenditures should be budgeted by character. An example of a character classification would be a) Current expenditures. b) Salaries. c) Public Safety. d) Police Department. 5. Which of the following is a primary benefit of a performance budget?... View Full Document

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