The following related entries were recorded in sequence in the general fund of a municipality: The sequence of entries indicates that
A)an adverse event was foreseen and a reserve of $15,000 was created; later the reserve was cancelled and a liability for the item was acknowledged.
B)an order was placed for goods or services estimated to cost $15,000; the actual cost was $15,350 for which a liability was acknowledged upon receipt.
C)encumbrances were anticipated but later failed to materialize and were reversed.A liability of $15,350 was incurred.
D)the first entry was erroneous and was reversed; a liability of $15,350 was acknowledged.

Question

The following related entries were recorded in sequence in the general fund of a municipality:  The sequence of entries indicates that
A)an adverse event was foreseen and a reserve of $15,000 was created; later the reserve was cancelled and a liability for the item was acknowledged. 
B)an order was placed for goods or services estimated to cost $15,000; the actual cost was $15,350 for which a liability was acknowledged upon receipt. 
C)encumbrances were anticipated but later failed to materialize and were reversed.A liability of $15,350 was incurred. 
D)the first entry was erroneous and was reversed; a liability of $15,350 was acknowledged.

Quizplus · Accepted Answer

The Answer is B

The Following Related Entries Were Recorded in Sequence in the General