[hopeful_cpa]

Question:

which of the following accounts of a govt unit is credited to close it out at the end of the fiscal year?

-reserved for encumbrances

-appropriations

-encumbrances

-revenues

BEC: Done
REG: Done
AUD: Done
FAR: Done

I'M DONE!!!!!! AAAAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Anonymous]

encumbrances

revenues and appropriations are both debited to close out the budget

reserve for encumbrances is an account that is credited once goods are ordered and then later debited once you received the goods

here are the JEs:

setting up a budget

DR estimated revenues

DR estimated other fin source

CR estim other financial use

CR appropriations

plug- budgetary fund balance

to close out the budget you set up above (just reverse everything)

DR estim other financial use

DR approp control

CR estim revenue

CR estim other financial source

plug- budgetary fund balance

close out your ACTUAL budget (because the budget you set up and what you actually use will never ever be exactly the same):

DR revenues

DR other financial source

CR other financial use

CR expenditures

CR encumbrances

here is where you would use the reserve for encumbrance account

order goods for $2400

DR encumbrance control 2400

CR reserved for encumbrance 2400

receive the goods:

DR reserved for encumbrance 2400

CR encumbrance control 2400

lets say you actually spent $3000 instead so you do this

DR expenditure 3000

CR voucher payable 3000

you make the payment:

DR voucher payable 3000

CR cash 3000

having fun yet? lol NFP accounting was so heavily tested on my exam

[Anonymous]

Opening JE

DR Estimated Revenues Control

CR Appropriations Control

DR/CR Budgetary Fund Balance

Closing JE

DR Appropriations Control

DR/CR Budgetary Fund Balance

CR Estimated Revenues Control

[Anonymous]

while that is correct kricket, he/she would not be able to answer the question based off that information alone. Those journal entries only address what the company initially budgeted for and we all know that the budget and what is actually spent is never the same. To be able to answer that question, you'd also need to know how to close out the ACTUAL budget

DR revenues

DR other financial source

CR other financial use

CR expenditures

CR encumbrances

thats how you know the answer is encumbrances

[Anonymous]

This is too funny. When I clicked on the thread, the only thing I saw was the OP's question and a reply from you that said “encumbrances”. This is freaky. But, yes, you are right, I only showed the entries for the budget. Thanks for helping out!

[Author]

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