Final answer:
The Permanent Fund is the one that does not record encumbrances because it is used to account for resources where only earnings may be used for government programs, hence it does not typically account for commitments like purchase orders.
Step-by-step explanation:
All of the following funds record encumbrances EXCEPT:
- General Fund
- Permanent Fund
- Special Revenues Fund
- Capital Projects Fund
In governmental accounting, an encumbrance is a commitment related to unperformed contracts for goods or services. This is part of the budgetary control system and is used to reserve portions of appropriations for which commitments have been made in the form of purchase orders or contracts. Encumbrances are commonly recorded for all types of funds except for the Permanent Fund. The Permanent Fund is used to account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs—hence, they do not typically account for encumbrances.
It is also worth noting that state and local governments benefit from federal expenditures and must follow strict rules about appropriations. Such appropriations often necessitate encumbrances in the aforementioned funds, but not in the Permanent Fund.