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ch05 - Chapter 5 Recognizing Expenditures in Governmental...

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ch05 Page 1 Chapter 5 Recognizing Expenditures in Governmental Funds TRUE/FALSE (CHAPTER 5) 1. Expenditures are generally recognized when resources are acquired; expenses when resources are consumed. 2. Governmental fund liabilities are considered current only when they must be liquidated with expendable available financial resources—not, as in businesses and in the government-wide statements, when they must be paid within a year. 3. In a governmental fund, expenditures for wages and salaries should be recognized in the period in which the employees earn them. 4. When accounting for inventory items in a governmental fund, GASB standards permit the use of the consumption method only. 5. The purchases method is consistent with full accrual basis of accounting. 6. When accounting for inventory items in a governmental fund, a reservation of fund balance is always required when the consumption method is used. 7. In budgeting for governmental funds, governments appropriate the resources for general capital assets in the periods when they are to be purchased, not in the periods in which the assets will be used. 8. Per GASB standards, governments do not report general capital assets or depreciation in governmental funds. 9. If recording a general long-term liability in a governmental fund upon issuing a bond, the credit should be to a bonds payable account. 10. Most governments budget (appropriate) resources for principal and interest only for the period in which a payment is due—not for future payments. 11. Government-wide statements present revenues and expenses from the perspective of the government, not of individual funds.
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