The Expenditures control account of a government is debited when which event occurs?

• A. A new encumbrance is created
• B. Purchases are ordered but not received
• C. Cash is paid for a purchase
• D. Supplies previously encumbered are received

Answer: (D)

In government accounting, expenditures are recognized when the goods or services are actually received, not merely when an order is placed or cash is paid. An encumbrance is a budgetary commitment that reserves funds for a future purchase. When the supplies that were previously encumbered are received, the governmentRecords the actual cost by debiting the Expenditures control account and removing the encumbrance by crediting Encumbrances. This is the moment the obligation becomes an actual expenditure.

The other events don’t increase expenditures: creating a new encumbrance only adds to encumbrances, not to actual spending; ordering but not receiving doesn’t incur an expenditure yet; and paying cash settles a liability and cash balance, but the expenditure was already recognized when the item was received or when the encumbrance was liquidated.