What is the journal entry for recording encumbrances control in governmental accounting?

In governmental accounting, the recording of encumbrances is essential for demonstrating the anticipated expenditures and ensuring that a portion of the budget is reserved for future obligations, such as purchase orders or contracts. The encumbrances control account is a key component in tracking these reservations.

When an encumbrance is recorded, the appropriate journal entry involves crediting the encumbrances control account. This indicates that a commitment has been made against the budget and that resources are reserved for future spending. The increase in this liability shows that the government has a financial commitment and that these funds are earmarked for specific expenditures. This method helps maintain budgetary control and accountability over funds.

Thus, crediting the encumbrances control account is the correct approach to accurately reflect the commitment of resources before the actual expenditure takes place. This entry does not affect the current expenditures because the encumbrance is recorded initially and will later be converted into actual expenditures once the goods or services are received.