The Expenditures control account of a government is credited when:

• A. Temporary accounts are closed at the end of the year
• B. When a grant is received and recorded
• C. When cash disbursements are recorded
• D. When an encumbrance is liquidated

Answer: (A)

In government accounting, temporary expenditure accounts are closed at year end and their activity is summarized in a central control account called the expenditures control account. The closing process moves the year’s expenditures out of the individual expenditure accounts and into this control account, so the detailed accounts are reset for the new year while the total for the year is captured in the control account. That transfer is recorded as a credit to the expenditures control account during the closing of the temporary accounts.

Grants affect revenues or other financing sources, not the closing of expenditures. Cash disbursements are the actual outflows and are recorded when they occur, not as a year-end closing step. Encumbrance liquidation relates to freeing encumbrances and does not govern the closing of temporary expenditure accounts.