Under the GASB codification, encumbrances outstanding at the end of a given year are not reflected in the operating statement of that year.

Question

Quizplus · Accepted Answer

Encumbrances are commitments related to unperformed contracts for goods or services and are recorded to reserve that portion of the applicable appropriation. They are not recognized as expenditures or liabilities in the operating statement until the goods or services are received, thus outstanding encumbrances at year-end do not affect that year's operating statement under GASB standards.

Under the GASB Codification, Encumbrances Outstanding at the End of a Given