The Encumbrances account is properly termed a
A) Long-term liability.
B) Reservation of unassigned fund balance.
C) Budgetary account.
D) Current liability if paid within a year; otherwise, long-term debt.

Question

Quizplus · Accepted Answer

The Encumbrances account is a budgetary account used to reflect outstanding commitments for goods or services that have been ordered or contracted for, but not yet received or paid for. It does not represent a long-term liability or reservation of fund balance, and it does not become long-term debt unless it remains outstanding beyond one year.

The Encumbrances Account Is Properly Termed a