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What do you call it when money is returned to an account?

Brian
Brian asked
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Last Modified: 2019-07-19
In accounting, what do you call it when an expenditure is less than expected and you return a portion of the money back to the budget? What do you call the amount that is recovered back to the account? I'm thinking it might have encumbrance in the name, but I'm probably wrong.
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David Johnson, CDSimple Geek from the '70s
CERTIFIED EXPERT
Distinguished Expert 2019

Commented:
Funds Available = Budget - Actuals - Encumbrances
When the vendor is paid, the encumbrance is reversed and the funds will appear under the Actual funds balance instead of as an Encumbrance balance.
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
For the majority of normal business expenditures, the business may underspend (spend less than budgeted) or overspend (more than budgeted).  These over / under expenditures are not in any way encumbered.  It works this way for all my For Profit and Not for Profit clients.
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
In Not for Profit organizations, money saved is sometimes put in a fund and designated for specific purposes. You may have heard the term "designated"  but that normally applies to Not for Profit organizations.
BrianSystems Administrator

Author

Commented:
I thought there was a term for funds put back into a budget code.  Something similar to reimbursement, but that term is typically a synonym for refund. I'm asking because I have a budget program that I created for my department and I need to add a feature for this and give it a name. For some reason, re-encomber is in my head, which isn't a real word and wouldn't make sense in this context.  I thought maybe the term existed and I'm just a little off on the spelling?  I suppose I can call it "Funds Returned".
Business Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018
Commented:
Not really. Just over / under budget.   We do this all the time for our clients.

You can by all means call it Funds Returned.  Nothing wrong with that. But if you have several hundred Expense accounts (common) it become unwieldly.  

Managers need the flexibility to be under budget in one line to cover off being over budget on another line

However for your use Funds Returned is fine. There is no standard accounting term for this.
BrianSystems Administrator

Author

Commented:
Thanks for the help!
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
You are most welcome and Good Luck with your measurements.  I get into this all the time, so I do understand your needs.