i think correct ans should be c since not within 60 days??

At the end of Year One, the City of Anna is creating fund-based financial statements for its governmental funds. Late in that year, the city acquired supplies at a cost of $12,000. This amount will be paid on March 12 of Year Two. Which of the following statements is true?

< name="answer" value="13219" =""> A A liability for $12,000 must be reported on the balance sheet at the end of Year One.

< name="answer" value="13220" =""> B A liability for $12,000 might be reported on the balance sheet at the end of Year One.

< name="answer" value="13221" =""> C A liability for $12,000 cannot be reported on the balance sheet at the end of Year One.

< name="answer" value="13222" =""> D A liability for $12,000 is reported if the money is paid before the financial statements are released.

ooops! answer to question 8 is incorrect...

The correct answer was B.

On fund-based financial statements for the governmental funds, the only liabilities reported are the current claims to current financial resources. Those liabilities are the ones that have already been incurred and will be paid quickly enough to use current financial resources being held. State and local governments are supposed to specify the time in which payment will be made and still be considered a claim to current financial resources. That is often 60 days but could be some other period such as 75 days or 90 days. This payment will be made almost 75 days into the subsequent year. If the government uses a 60 day period, then payment is not soon enough and the transaction is not reported until Year Two. If the government uses 75 days or some longer period of time to define a current claim, the transaction is recorded in Year One so that the liability is reported on the balance sheet.