Encumbrances under modified accrual accounting are recognized when fund liabilities are incurred.

Name: Encumbrances under modified accrual accounting are recognized when fund liabilities are incurred.
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Purchase orders and contracts are commitments that will result in liabilities when the goods or services are received or the contracts executed. Such expected expenditures are called encumbrances. The fund records an expenditure when fund liabilities are incurred.

Encumbrances Under Modified Accrual Accounting Are Recognized When Fund Liabilities