Question

At the end of the 2014 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2015.In 2015 the encumbered goods were received at an invoiced cost of $520.How much would be recorded as the 2015 expenditure?

a. $520
b. $500
c. $0
d. $20

Answer 1

The 2015 expenditure recorded upon receiving goods that were encumbered for $500 in 2014 but received at $520 in 2015 would be $520.

Step-by-step explanation:

The student has asked about accounting for encumbrances in government accounting, specifically how much would be recorded as the 2015 expenditure once encumbered goods are received at a higher cost than initially recorded. At the end of the 2014 fiscal year, the General Fund had $500 in encumbrances; in 2015, the encumbered goods were received at an invoiced cost of $520. The correct recording for the 2015 expenditure would be $520 (option a), since expenditures should reflect the actual cost of goods when they are received, despite being initially encumbered for a lower amount.