[Jade CPA-to-be]

a question from Becker

the budget of a government unit, for which the appropriations exceeds the estimated revenues, was adopted and recorded in the general ledger at the beginning of the year. during the year, expenditures and encumbrances were less than appropriations; whereas revenues equaled estimated revenues. the budgetary fund balance account is:

correct answer: debited at the beginning of the year and credited at the end of the year.

becker explains that when expenditures and encumbrances are less than appropriations,

Appropriations control xxx

estimated revenues xxxx

budgetary fund balace xxxx

according to this JE, the budgetary fund balance is credited at the end of the year. but why?

can anyone help? thanks in advance

CPA Licensed in California- Class of 2013

[momto5]

The activity during the year does not affect how the budget is booked and reversed. The entry at the beginning of the year debits the budgetary fund balance because the appropriations are greater than estimated revenues. For example:

Estimated revenue control 150,000

Budgetary fund balance 50,000

Appropriations control 200,000

At the end of the year, this exact budget just gets reversed out, so budgetary fund balance would need to be debited. Therefore, what the expenditures and encumbrances were during the year doesn't matter. See Becker F8-18.

FAR - 92 (4/27/12)
AUD - 96 (7/17/12)
BEC - 92 (8/30/12)
REG - 91 (11/12/12)

[Jade CPA-to-be]

@momto5. thanks for your explanation. i guess becker's explanation confuses me.

Does anybody knows this?

also, on becker F8-46, it saids JE to record capital lease equipment:

DR Expenditures xxx

CR other financing sources xxx

Where does ” other financing sources” account go? is this the same account for recording bonds proceeds and transfer in and out on “statement of revenues, expenditres, and changes in fund balance” ?

governmental accounting is really hard!!!

thanks in advance

CPA Licensed in California- Class of 2013

[Author]

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