Because year-end closings are artificial in a capital projects fund it is desirable to debit encumbrances on the first day of the new fiscal year in the amount that was closed at the end of the prior fiscal year.

Question

Quizplus · Accepted Answer

This procedure simplifies accounting for expenditures in the subsequent year resulting from encumbrances of the prior year(s).

Because Year-End Closings Are Artificial in a Capital Projects Fund