C is corrent because when goods have been approved for purchase, an “Encumbrances” account is debited and a Reserved for Encumbrances” account is credited for the estimated cost of the goods. As the goods are received, the following entries are recorded:
A is incorrect because reserve for encumbrances is debited at this time.
B is incorrect because appropriations is a budgetary account which is integrated into the governmental accounting system when the budget is recorded and when the budgetary accounts are closed at the end of the fiscal year. The appropriations account is not involved with the purchase of goods.
D is incorrect because expenditures is debited at this time.
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