What are the entries made when goods are received and the purchase was previously recorded as an encumbrance?

When goods are received and the purchase was previously recorded as an encumbrance, the correct entries reflect the transfer from the encumbrance account to the expenditure account, as well as the corresponding liability. By debiting the expenditure account and crediting vouchers payable, you are indicating that the goods have been received, and now there is an obligation to pay for them.

The expenditure account is debited to recognize the consumption of resources as the goods are now in possession and used for operations, effectively turning the commitment (encumbrance) into an actual expense. At the same time, vouchers payable is credited to record the outstanding liability that arises from the purchase, indicating that the organization has an obligation to pay for the goods received.

The other options don’t align with the process of recognizing the shift from an encumbrance to an expenditure. Transactions related to budgetary control or lease liabilities pertain to different contexts, such as recording budget adjustments or leases, rather than reflecting the receipt of goods in this specific case.