The Budgetary Fund Balance - Reserve for Encumbrances is used to record commitments of the government to purchase goods and services.
The Budgetary Fund Balance - Reserve for Encumbrances is used to record commitments of the government to purchase goods and services.
For example, let's say the government wants to purchase new office supplies. They will allocate a certain amount of money for this purchase and record it as a commitment in the Budgetary Fund Balance - Reserve for Encumbrances. Once the office supplies are purchased, the commitment is released and the actual expenditure is recorded.
This reserve helps the government keep track of its commitments and ensures that funds are available for planned purchases.