When are budgetary, actual, or encumbrance entries combined in accounting?

In governmental accounting, budgetary, actual, and encumbrance entries serve distinct purposes and are recorded separately to provide clear tracking and control over financial resources. Budgetary entries are made to establish legal authority for spending and to control expenditures. Actual entries reflect the actual revenues and expenditures incurred during a period, while encumbrance entries represent commitments made for future expenditures, such as purchase orders.

These entries are not combined at any point in the accounting cycle, as each type of entry has its own role and helps maintain transparency and accountability in public sector financial management. Keeping them separate allows for a more accurate representation of the financial position, helps in budgetary compliance, and ensures that funds are available for intended purposes without leading to misstatements or a lack of oversight.

The separate treatment of budgetary, actual, and encumbrance entries is essential for maintaining a clear audit trail and facilitating effective financial monitoring, which is why they are not combined at any stage.