When equipment is ordered by a department of the government, the purchase order should be recorded in the General Fund as a debit to:
A) Appropriations.
B) Equipment.
C) Encumbrances.
D) Expenditures.

Question

Quizplus · Accepted Answer

When equipment is ordered by a department of the government, the purchase order should be recorded as an encumbrance until the equipment is received. Encumbrances represent commitments that have been made but not yet paid for. Therefore, the purchase order should be recorded as a debit to Encumbrances in the General Fund. Once the equipment is received and paid for, the encumbrance is released and the payment is recorded as a debit to Expenditures.

When Equipment Is Ordered by a Department of the Government