The City of Watsonville places a purchase order for street maintenance supplies of $56,000.This would result in:

Question

Quizplus · Accepted Answer

A purchase order is a commitment to purchase goods or services in the future, which means it is an encumbrance (a reservation of funds for a specific purpose). Therefore, the answer is a debit to encumbrances-street maintenance supplies. Once the supplies are received, a credit will be made to encumbrances and a debit to expenditures-street maintenance supplies.

The City of Watsonville Places a Purchase Order for Street