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What is mean of Encumbrance in oracle budget module?

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Question added by khaled Elrawy , صاحب الشركة , مكتب خالد الراوي للمحاسبة والمراجعة وأنظمة الكمبيوتر
Date Posted: 2015/02/20
Imran Shaikh
by Imran Shaikh , Database Specialist Exadata,Oracle ERP , Government of Abudhabi

With General Ledger you can record pre-expenditures commonly known as encumbrances. The primary purpose of tracking encumbrances is to avoid overspending a budget. Encumbrances can also be used to predict cash outflow and as a general planning tool.

To use the full capabilities of encumbrance accounting, you must enable the budgetary control flag for a set of books. When you enable the budgetary control flag, the system automatically creates encumbrances from requisitions, purchase orders and other transactions originating in feeder systems such as Purchasing and Payables.

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