When is it NOT appropriate to use an encumbrance system?
A)When only a small part of expenditures for goods and services are discretionary.
B)When there is a significant lag between purchase orders and the receipt of goods.
C)When reporting is done on a yearly basis.
D)When commitments are made on a decentralized basis.

Question

Quizplus · Accepted Answer

An encumbrance system is less useful when only a small part of expenditures for goods and services are discretionary because the system is designed to track commitments and obligations before they become actual expenditures, which is most useful when there is a significant portion of the budget that is being actively managed and allocated throughout the fiscal period.

When Is It NOT Appropriate to Use an Encumbrance System