Which of the following observations concerning encumbrances is NOT true?
A) Their purpose is to ensure that the expenditures within a period do not exceed the budgeted appropriations.
B) They provide a control system and safeguard for governmental unit administrators.
C) They are a unique element of governmental accounting.
D) They are recognized only at the time disbursements are made.

Question

Quizplus · Accepted Answer

Encumbrances are recognized at the time a commitment is made, not at the time disbursements are made. Encumbrances provide a mechanism for controlling expenditures and preventing overspending. They are unique to governmental accounting and serve as a control system and safeguard for governmental unit administrators.

Which of the Following Observations Concerning Encumbrances Is NOT True