Which of the following is NOT a classification of the equity accounts of a proprietary fund?
A) Equity invested in capital assets, net of related debt
B) Equity restricted both externally and internally
C) Equity encumbrances
D) Equity unrestricted

Question

Quizplus · Accepted Answer

The other three choices are all classifications of equity accounts for a proprietary fund. Equity invested in capital assets, net of related debt represents the net investment in capital assets after deducting any outstanding debt related to those assets. Equity restricted both externally and internally includes amounts that have restrictions placed on them either by external parties (such as grantors) or internally by the entity itself (such as reserves). Equity unrestricted represents the remaining equity that is not restricted in any way. However, equity encumbrances are not a classification of equity accounts. Encumbrances are commitments to pay for goods or services that have not yet been received or used, and are recorded as liabilities until they are fulfilled.

Which of the Following Is NOT a Classification of the Equity