Encumbrance accounting is not appropriate for Debt Service Funds.

Question

Quizplus · Accepted Answer

Encumbrance accounting is primarily used for budgetary control in governmental funds to record obligations or commitments that will subsequently become expenditures when goods or services are received. Debt Service Funds, however, are used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest, which do not involve encumbering goods or services but rather making cash payments.

Encumbrance Accounting Is Not Appropriate for Debt Service Funds