Should encumbrances be interpreted as Accounts Payable in the full-accrual Statement of Net Assets?
No. Encumbrances and Accounts Payable are two different concepts. Accounts Payable are amounts owed for goods or services received by the end of the fiscal period. Encumbrance accounts are budgetary accounts used to show obligated portions of appropriations. During year-end closing, encumbrances are liquidated and encumbrance account balances are returned to the unappropriated fund balance. Encumbered amounts might be accrued as Accounts Payable, but only if the goods or services for which the encumbrances were set up were received by the end of the year.
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