Q1:

A city places a purchase order for police sedans at an estimated price of $100,000, The purchase order allows the supplier to increase the price by up to 5 percent if the price of steel increases, The city received the sedans along with an invoice for $104,000, With what mount should the city credit the Encumbrances account?

a.

1,000

b.

100,000

c.

104,000

d.

4,000

Q2:

Under the accrual basis of accounting, revenues are recognized when measurable and available to finance expenditures of the current period.

a.

TRUE

b.

FALSE