B is corrent because per GASB Codification Section 1700, fixed dollar budgets normally are not adopted for proprietary funds. Thus, the Enterprise Fund would not integrate a budget, and encumbrances would not be appropriate in the Enterprise Fund accounting system.
A is incorrect because encumbrances would appear in the Capital Projects Fund. Encumbrances is a budgetary account integrated in the formal accounting system of governmental fund types. When goods or services are ordered, Encumbrances is debited and Fund Balance—Reserved for Encumbrances is credited.
C is incorrect because encumbrances would appear in the Special Revenue Fund. Encumbrances is a budgetary account integrated in the formal accounting system of governmental fund types. When goods or services are ordered, Encumbrances is debited and Budgetary Fund Balance—Reserved for Encumbrances is credited.
D is incorrect because encumbrances would appear in the General Fund. Encumbrances is a budgetary account integrated in the formal accounting system of governmental fund types. When goods or services are ordered, Encumbrances is debited and Budgetary Fund Balance—Reserved for Encumbrances is credited.
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