FASAB SFFAS No. 10 (Accounting for Internal Use Software) provides guidance for capitalizing software development costs. The following costs are capitalized:
Software configuration and development: $750,000
Testing for functionality (ready for use): $225,000
These fall within the "software development stage."
The following are not capitalized:
Research costs (e.g., feasibility studies): $100,000 # Expense
Data conversion costs: $500,000 # Expense (unless part of application development, which it's not here) Capitalized total = $750,000 + $225,000 = $975,000 Relevant References:
FASAB SFFAS No. 10 - Accounting for Internal Use Software
OMB Circular A-136 - Capitalization Guidance
Treasury Financial Manual (TFM) - Capital Assets
B). $975,000

This is the point when a proprietary entry and a budgetary entry must both be recorded:
Proprietary entry: To record the asset (e.g., equipment) and recognize the payable Budgetary entry: To move from unpaid obligation (Undelivered Orders) to paid obligation (Delivered Orders) Receiving goods/services triggers both the accrual of the expense and the update of the obligation's status in the budgetary accounts.
Relevant References:
FASAB SFFAS No. 1 - Accounting for Selected Assets and Liabilities
Treasury Financial Manual, Part 2, Ch. 4700 - Proprietary vs. Budgetary Accounting GAO Red Book - Appropriations Law B). A contracting officer's representative receives delivery of previously ordered printers.

Comprehensive Detailed Explanation:
Object classes categorize federal government obligations by the type of goods or services purchased, such as personnel compensation, equipment, travel, etc. These are standardized in OMB Circular A-11, Section 83.
This classification supports budgeting, analysis, and reporting.
Relevant References:
OMB Circular A-11, Section 83 - Object Classification
USSGL (U.S. Standard General Ledger) Glossary
GAO Glossary of Budget Terms
B). object classes

The city issues $100,000 in general obligation bonds on April 1, 2024, and the first principal payment of
$10,000 is due on March 31, 2025. The interest rate is 5% annually on the unpaid principal balance.
As of April 1, 2024, the full $100,000 is outstanding. For the full fiscal year (April 1, 2024 to March 31,
2025), interest accrues on the full amount until payment is made. The interest on $100,000 for one year at 5%
=
Interest Expense = $100,000 × 5% = $5,000
Note: Interest is typically calculated on the beginning-of-period balance, and since the payment is made at the end of the year (March 31, 2025), the full $5,000 interest is recognized for that year.
Relevant Standards and References:
GASB Statement No. 34, Basic Financial Statements for State and Local Governments GASB Codification Section 2200 (Government-Wide Financial Statements) GFOA Guidance on Long-Term Debt Accounting

When a government issues purchase orders, it records encumbrances to reflect commitments against appropriations. This helps track budgetary commitments and avoid overspending.
The entry is recorded in the budgetary accounts (not proprietary accounts) as follows:
Debit Encumbrances: Recognizes the commitment
Credit Budgetary Fund Balance (or Reserve for Encumbrances): Reflects that part of the fund balance is committed This is consistent with modified accrual accounting and standard governmental fund practice.
Relevant References:
GASB Codification Section 1300 - Budgetary Accounting
GFOA Best Practices - Encumbrance Accounting
GAO Principles of Appropriation Law - Encumbrance Controls
D). Debit Encumbrances $427,000; Credit Budgetary Fund Balance $427,000