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. All expenditures are debits. If there is an expenditure refund or a correction, the entry will be a credit and reduce the total expenditure balance. A transaction is any entry made in the accounting records except those affecting the budget or encumbrances.