How does an encumbrance affect expenses and expenditures?
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How does an encumbrance affect expenses and expenditures?
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Solution Summary
In a 201 word solution, the response explains the process of using encumbrances in governmental and not-for-profit accounting.
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An encumbrance will not affect the income statement when the initial entry is made.
The process: A purchase order is issued to buy something. As of the date the purchase order is signed, there is an obligation to complete the order. In governmental accounting, the purchase order will ...
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