Which describes the typical order of steps in the acquisition of goods and services by an activity in the General Fund?

• A. Disbursement, Expenditure, Encumbrance, Appropriation
• B. Appropriation, Encumbrance, Expenditure, Disbursement
• C. Encumbrance, Appropriation, Disbursement, Expenditure
• D. Appropriation, Expenditure, Encumbrance, Disbursement

Answer: (B)

In government fund accounting, the flow from budget authorization to cash outlay follows a logical sequence. An appropriation provides the legal authority for the activity to incur obligations and spend resources. Once funds are authorized, the next step is to record an encumbrance, which reserves a specific portion of the appropriation for a pending purchase or contract. This encumbrance shows that funds are committed and should not be used for other purposes. When the goods or services are actually received or the liability is incurred, the expenditure is recognized, reflecting the cost to the General Fund for that period. Finally, when payment is made to settle the obligation, the disbursement occurs, representing the cash outflow. This order—appropriation, encumbrance, expenditure, disbursement—best mirrors how budget authority is issued, committed, expended, and paid in the General Fund.