Final answer:
The Encumbrances Outstanding account is a liability account in accounting that represents outstanding obligations or commitments to make future payments.
Step-by-step explanation:
The Encumbrances Outstanding account is properly termed a liability account in accounting.
Encumbrances are restrictions or liabilities on resources that have not yet been fully paid for or used. The Encumbrances Outstanding account represents the total amount of outstanding encumbrances, which are obligations or commitments to make future payments for goods or services.
For example, a company may have outstanding purchase orders that have not been fully paid for or fulfilled. These outstanding obligations are recorded in the Encumbrances Outstanding account until they are satisfied.