Which account would not be closed at the end of each fiscal year?

• A. Revenues
• B. Fund Balance
• C. Expenditures
• D. Encumbrances

Answer: (B)

In governmental funds, year-end closing moves the results of operations from temporary accounts into the fund’s equity. Revenues and Expenditures are temporary accounts that are closed to Fund Balance, so they don’t carry into the next year. Encumbrances reflect commitments and are typically reclassified as a reserve within Fund Balance (or otherwise absorbed into the fund balance), rather than remaining as a separate ongoing liability. The Fund Balance itself is a permanent balance sheet account that represents the net resources of the fund and carries forward to the next fiscal year, so it is not closed.