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How does an encumbrance affect expenses and expenditures

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Expenditures for governmental organizations are handled differently then those in for profit businesses. Most budgets are approved at least one year in advance and annual audits ensure that the government organizations follow the guidelines set in place by the approved budget. What is the purpose of an encumbrance? How does an encumbrance affect expenses and expenditures? What is the impact of encumbrance accounting on a governmental budget?

Reference no: EM131792999

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