General Consultant Discussion

Remind me again how encumbrance accounting works? Thanks.

You mean for governmental reporting??

Typical of non-profit requirements. I vaguely remember it has to do with setting up a budget on a GL account and then monitoring spending against that budget including PO's & Requisition drawn to avoid going over the budget.

I've always thought of encumbrance accounting as fund account. With true fund accounting, you may run several self-balancing chart of accounts. This is not much more than what we think of as departmental accounting -- except each ""department"" (fund) has a complete balance sheet. If you were to make entries between ""departments"" then a due to / due from would be recorded to keep the entry in balance.

Encumbrances are obligations that have not been incurred. You need to debit an encumbered expense account and a encumbered total as the offset account. You then print an income statement on an encumbered basis and include both expenses incurred and expenses encumbered which governments do and some non-profits do as well. Haven't worked with this in a long while.