What journal entries are required when goods or services are received?

When goods or services are received in the context of governmental accounting, the appropriate journal entry reflects the recognition of actual expenditures that have been incurred. This process involves debiting the Expenditures Control account, which increases expenditures to show that resources have been consumed. Simultaneously, a credit to the Liability Account is made to acknowledge that the government now has an obligation to pay for those goods or services.

The choice you selected correctly demonstrates this process by debiting the Budgetary Fund Balance - Reserve for Encumbrances Account. This adjustment indicates that previously set aside budgetary amounts reserved for encumbrances are now being utilized as the goods or services are received. This entry effectively removes the encumbrance from the budgetary accounts, signifying that the budgeted amount is no longer being earmarked but rather put into actual expenditure status.

This accounting treatment aligns with the principles of governmental accounting by ensuring accurate tracking of resources and obligations, thereby providing a clearer picture of a government entity's financial position and activity at any given point in time.