reserve for encumbrances

Dictionary of Accounting Terms for: reserve for encumbrances
reserve for encumbrances

in government accounting, account reflecting part of the fund balance that has been committed by a contract, purchase order, salary agreement, travel claim, etc. Therefore, reserve for encumbrances represents a reservation of the fund’s equity. Entries for this account occur when an encumbrance comes into being and when the actual expenditure is later made.

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