A county has $3,650,000 of outstanding encumbrances related to unassigned resources at year-end, December 31, 2019. It expects to accept delivery on all orders in 2020. How should the county handle the outstanding encumbrances in its General Fund balance sheet at December 31, 2019?

Question

Quizplus · Accepted Answer

Amounts encumbered from unassigned resources should be reported as Assigned fund balance because the authority given to the person that places the order results in that amount meeting the criteria for classification as assigned. Because the revenue, expenditure, and transfer accounts in the General Fund are closed to Unassigned fund balance when the books are closed, a journal entry is needed to reclassify open encumbrances at year-end (if not previously classified as restricted, committed, or assigned) from Unassigned fund balance to Assigned fund balance.

A County Has $3,650,000 of Outstanding Encumbrances Related to Unassigned