what is commitment accounting?

Answer 1

Commitment Accounting

"Also known as Encumbrance Accounting or Invoice Matching, Commitment Accounting allows the posting of expenses before the creation or collection of the underlying documents such as invoices, purchase orders, etc., and before those committed funds are paid out.

This allows the financial records to reflect the allocation of budgetary resources when they are committed instead of when they are paid out, providing financial information earlier than “budget to actual” reports and preventing budget overruns.

Typical “continuing” commitments would include wages and salaries for employees and monthly utility payments, and typical “specific” commitments might include the verbal agreement (and subsequent written agreement) to hire a band for an event."

"Commitment accounting identifies and reserves funds for future payment obligations. Commitment accounting is required to ensure that departments anticipate their expenditures so as not to exceed appropriation ceilings. Commitment accounting means the accounting entries are made and the appropriation is charged when a contract is entered into or when an order is placed for goods or services. The entries record the amount to be reserved out of the unencumbered balance remaining in an appropriation in order to honour the commitment."

Answer 2

Commitment Accounting

Answer 3

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My first husband and I had 1 shared account...he was continually taking money out and not telling me, so checks ended up bouncing...it was a mess... My second husband and I maintained 2 separate accounts and we just each paid whatever portion of the bills we needed to pay, from our separate accounts...I decided when my first marriage ended that I never wanted to do the 1 common account thing ever again... I can love someone with all my heart, that doesn't mean they are good with money/finances...I don't trust anyone with complete access to all my earnings...your husband is using the "trust" issue to try to manipulate you...what actually DOES make the most sense, is what you suggest (separate accounts, and 1 shared account you both contribute to and pay shared bills from)...