Which principle emphasizes that encumbrances at fiscal year-end should be carried over to the next fiscal year if they are not fulfilled?

The correct answer emphasizes the importance of the encumbrance accounting principle, which is fundamental in governmental accounting. This principle dictates that when an encumbrance is established, it represents a commitment of funds for future expenditures. By carrying over encumbrances at fiscal year-end that remain unfulfilled, the intention is to accurately reflect the financial commitments of the government. This ensures that the budgetary resources are properly accounted for in future fiscal periods, preventing the overstatement of available funds.

This practice helps maintain the integrity of the budget and promotes transparency in the reporting of financial obligations. It allows for a clearer understanding of the financial status, as unspent appropriations and commitments are appropriately recognized, enabling financial statements to portray a truthful picture of the government’s financial position. Thus, this principle is essential for accurate financial reporting and effective fiscal management.