Understanding Encumbrance Accounting & Its Process 27 mei 2022 – Posted in: Bookkeeping

To record the encumbrance, you’ll need to complete the following encumbrance accounting processes by recording the following journal entries. It’s not a prepaid expense, as the cash hasn’t left your account, nor is it retained earnings an accrued expense, as it also hasn’t been incurred. Organizations account for future expenditures by enforcing budgetary controls and monitoring spending. The Importance of Managing Encumbrances for Budgetary Compliance This involves updating the encumbrance amounts as commitments are fulfilled…