Policy Six A basic understanding of certain accounting terminology as it applies to the University's accounting system is helpful in understanding the information presented in this section and in dealing with the Controller's Office. The remainder of this statement discusses terms that are basic to the understanding of the University's accounting. Refer to Policy Statement 5, Account Numbers, for a detailed description of the account numbering system at the University. All budget amounts for expenditure accounts have debit balances.
All budget amounts for revenue accounts have credit balances.
An encumbrance is the amount of money a department has contracted to spend through procurements and purchase orders. Once the department has contracted to make the purchase, the money becomes obligated or encumbered. Encumbrances have debit balances and can never be less than zero. When checks are written to pay encumbrances, the encumbrance amount is reduced or liquidated. Amounts liquidated will appear as credits in the encumbrance column and as debits in the expenditure column.