If the actual liability for goods received in the current year differs from the estimated liability recorded when the goods were ordered in the prior year, the Encumbrances account should be credited in the amount of the estimated liability.

Question

Quizplus · Accepted Answer

The Encumbrances account is credited in the amount of the estimated liability to reverse the accrual recorded in the prior year.

If the Actual Liability for Goods Received in the Current