Encumbrance Accounting Flashcards Preview

Wiley FAR > Encumbrance Accounting > Flashcards

Flashcards in Encumbrance Accounting Deck (12):
1

What account represents the estimated dollar value of outstanding purchase orders?

Encumbrances account.

2

Is the normal balance of the encumbrances account a credit or a debit?

It is a debit.

3

What is the equation for 

Unencumbered / Unexpended Appropriation?

+   Appropriations

— Encumbrances

— Expenditures

Unencumbered / Unexpended Appropriation

4

What is a term for when a purchase order is prepared?

"LET"

5

What is the journal entry to record the processing of a purchase order?

Encumbrances                            XXX

    Budgetary Fund Balance              XXX

6

What is the two-part entry used to record

the receipt of goods/services?

  1. Encumbrance amount is reversed (liquidated)
  2. Actual expenditure is recognized

 

Budgetary Fund Balance     XXX

    Encumbrances                      XXX

Expenditures (Actual)            XXX

    Vouchers Payable/Cash        XXX

7

What are similar references to

Encumbrance?

  1. Estimated Expenditure
  2. Estimated Cost

8

What are similar references to Expenditures?

  1. Actul Expenditure
  2. Invoice Cost

9

What is the closing journal entry for 

Encumbrances?

Budgetary Fund Balance               

    Encumbrances                                              

Unassigned Fund Balance*                           

    Fund Balance-Assigned (or Committed)       

Note that after all closing entries have been made, the balance in the Fund Balance - Assigned (or Committed) account includes the amount outstanding encumbrances at year end.

10

What are the 5 fund categorise in

Encumbrance Accounting?

  1. Nonspendable
  2. Restricted
  3. Committed
  4. Assigned
  5. Unassigned

11

What is the purpose of

Encumberance Accounting?

  • Accounts for what we purchased before the goods/services are received
  • Keeps us from overspending

12

What items are rarely encumbered?

  1. Regularly scheduled entries
    • Payroll
    • Interfund transactions
  2. Petty cash items