Question

Your customer has enabled encumbrance accounting. You have a control budget with the advisory level set at control. For November 2015, your budget for a given combination is $5,000 USD. You have an approved requisition of $900 USD and you have an approved purchase order of $2,500 USD. An adjustment encumbrance journal is created in the General Ledger for the obligation type for $1,600 USD. You then cancelled the approved PO line of $400 USD. For November 2015, you created a new invoice by matching to the PO for $2,100 USD.

Which two statements are true?
a) Purchase order encumbrance will be released for $2,100 USD.
b) As you are matching to a purchase order,
c) the system will allow the user to create an invoice with the reservation status of Reserved.

Answer 1

The correct statements are:

• a) Purchase order encumbrance will be released for $2,100 USD.
• c) The system will allow the user to create an invoice with the reservation status of Reserved.

Step-by-step explanation:

When the new invoice is matched to the purchase order for $2,100 USD, it effectively reduces the remaining encumbrance amount associated with the purchase order to that value, releasing the encumbrance for the matched amount. Regarding the reservation status of the invoice, since it's matched to a purchase order, the system recognizes the reserved status, ensuring the allocation against the remaining encumbrance. Thus, the $2,100 USD invoice will decrease the encumbrance and will be allowed with a reservation status, maintaining accuracy in encumbrance accounting.

The correct answers reiterate that a) the encumbrance will be released for $2,100 USD and c) the invoice can be created with the reservation status of Reserved.