The receipt of equipment that had previously been ordered should be recorded in the General Fund as a debit to which account?

• A. Expenditures
• B. Equipment
• C. Encumbrances
• D. Accounts Payable

Answer: (C)

Encumbrances are a budgetary control used to show funds set aside for orders issued but not yet received. When equipment is ordered, an encumbrance is recorded to indicate that part of the appropriation is committed. Upon actual receipt, that commitment is relieved and the government records the actual outlay.

The typical entry on receipt is to record the expenditure for the cost of the equipment and to clear the encumbrance. In practical terms, you would debit Expenditures (often Expenditures— Capital Outlay or Expenditures— Equipment, depending on the classification) and credit Encumbrances to cancel the prior commitment. If a liability is created at receipt, you’d also credit a payables account (like Vouchers Payable) and later debit that liability when payment is made. In the General Fund, the equipment asset itself appears in the government-wide statements, not in the General Fund, which is why the expenditure is the focus in the General Fund entry.

So, the debit on receipt is typically to Expenditures, with the encumbrance being credited to clear the prior commitment.