Chapter 15 - The General Fund And The Account Groups. Accounting Standards For State & Local Governments

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1 1 The General Fund And The Account Groups - Heading 2 Accounting Standards - Heading Chapter 15 - The General Fund And The Account Groups Accounting Standards For State & Local Governments 3 Accounting Standards Accounting Standards - 2 The Governmental Accounting Standards Board (GASB) is sister organization of FASB Both run by Financial Accounting Foundation GASB issues standards for State & Local Gov ts Includes public universities & hospitals Doesn t include Fed Gov t Fed Gov t has own acct standards If no GASB standard Look at AICPA and FASB pronouncements that are applicable to state & local Gs 1

2 5 Accounting Standards Accounting Standards - 4 GASB standards intended to provide G accountability Let taxpayers know what G is doing Let taxpayers know whether G is being operated within legal constraints imposed by citizenry Significant part of accountability is interperiod equity Is G living within its means? Is G running up deficits that must be paid in future years? 7 Accounting Standards - 5 Because of the need to show whether interperiod equity exists Most of the focus of G FSs is to show how much cash came in & how much cash is going out This is handled in what are called governmental funds G Funds usually cover a particular type of operations particular focus and show all the cash inflows & outflows for those operations for a given period E.g., CSULB can have a fund that covers all of its equipment purchases by the CBA computer lab The fund reports all the cash that came in to pay for equipment & all the cash that was paid out for equipment 8 Accounting Standards - 5 If your focus is inter-period equity the assets & debts of a G are not considered that important Do we care about the fact that the College bought the CBA building in 1992? For this reason, G assets & debts were just listed in what were called Account Groups 1 acct group for assets 1 acct group for debts 2

3 9 Accounting Standards Accounting Standards - 6 GASB Statement No. 34 June, 1999 Made huge change in G accounting GASB Stmt No. 34 still provides that G funds provide FS showing inflows & outflows BUT Gs must now also provide Government-Wide (GWide) financial statements Similar rules as used by businesses GASB Stmt No. 34 dropped use of account groups Despite this, Book still teaches acct groups because they can be useful in preparing GWide FS 11 Funds & Account Groups - Heading 12 Funds & Account Groups - 1 Funds & Account Groups Three fund types Governmental Proprietary Fiduciary Each fund separate set of accounts self-balancing FSs prepared for each fund 3

4 13 Funds & Account Groups - 1 Governmental Funds General G activities Financed primarily by taxes and inter-government grants We are interested in whether G funds had inter-period equity Their assets & debts are CAs & CLs 14 Funds & Account Groups - 1 Proprietary Funds Business-type activities E.g., publicly-owned utility (DWP) Revenue from charges to customers/clients With P funds We are interested that the P funds operations are not costing the G anything Because of this, P fund FS Use accrual method like business Their accts include all assets/liabilities of business operations Includes LT Assets & LT Liabilities 15 Funds & Account Groups Funds & Account Groups - 1 Fiduciary Funds G acts as trustee or agent E.g., G given assets which are to be used for the benefit of some outside individual(s) Sometimes G given funds which are held in trust & only income is spent Because of this F funds need to know what is income & what is principal F fund FS: Follow accounting standards similar to GAAP Their accts include all assets/liabilities of business operations Including LT Assets & LT Liabilities Account Groups Not required by GASB Statement No. 34 But still used to prepare GWide FSs Two account groups: General fixed/capital assets and General LT liabilities 4

5 17 Governmental Funds - Heading 18 Funds & Account Groups - 1 Governmental Funds Governmental funds Every G Unit has a General fund May have other G funds If G does a lot of some type of operation: G can set up other G fund to handle that type of operation Makes General fund less cluttered E.g. of other G funds: Debt Service funds used to pay principal & interest on G debt 19 Revenues - Heading Revenues 20 Revenues - 2 Governmental fund revenues are increases in resources From external parties Do not have to be repaid Arise from Non-exchange (e.g., taxes) People & Cos pay amounts to Gs & Gs give nothing in return Exchange transactions (e.g., filing fees at government offices) Government provides services & Recipients pay for services rendered 5

6 21 Revenues Revenues - 3 G funds often use modified accrual basis to recognize rev Hybrid some aspects of Accrual method & Cash-basis accounting Depends on the situation Revenue Recognized When Billed Under modified accrual basis method Revenues are often accrued when due or billed If expected to be collected during year or shortly thereafter E.g.s Income taxes - revenue when tax returns filed Sales taxes - revenue when tax returns filed Property Taxes - revenue when tax bills sent out by G 23 Revenues Revenues - 5 Amount recognized G only recognizes net amount estimated to be collected Create Allowance for Uncollectible Taxes for unpaid part D. Taxes Receivable Current $919,000 Cr. Revenues (control) $881,300 Allow For Uncoll Current Taxes 37,700 6

7 25 Revenues - 6 Deferred Revenue G often receive funds from other Gs (e.g. Fed G), but must provide services in exchange G either has cash or a legal right to receive funds (A/R) Recipient G has Deferred Revenue until it satisfies all tasks set forth in the grant 26 Revenues - 6 E.g., a $100,000 Fed grant is received for economic development Additional $50,000 is due prior to year-end Revenue will be recognized when expenditures are incurred for the grant program D. Cash $100,000 Due from Federal Government 50,000 Cr. Deferred Revenue $150, Revenues Revenues - 8 Revenue Accrued When Earned Interest on investments and delinquent taxes recognized when earned Dividends recognized when declared Revenue Recognized When Received Some revenues recognized when received & earned (cash basis method) Fees for licenses, permits, fines, forfeits, & parking meter receipts Amount collected not known prior to collection Donations and gifts recognized when received 7

8 29 Revenues Revenues - 10 Receipts Not considered Revenue Amounts received from loans (bonds) are not revenue Amounts received from the sale of an asset are not revenue (not even the gain if any) This is on the fund level Gains/losses would be rev/loss on GWide FS E.g., $5,000 received from sale of an old car: D. Cash $5,000 C. Other Financing Sources $5, Revenues - 10 Inter-G fund transfers are not Revenue Don t want revenue counted twice E.g., General Fund collects taxes (Revenue) & then gives funds to Debt Service Fund (Other Financing Sources) General Fund: 32 Expenditures - Heading Expenditures D. Cash $5,000 C. Revenue $5,000 D. Other Financing Uses $5,000 C. Cash $5,000 Debt Service Fund: D. Cash $5,000 C. Other Financing Sources $5,000 8

9 33 Expenditures Expenditures - 11 Because we are interested in G fund cash inflows & outflows G funds report expenditures rather than expenses E.g., G funds don t report depreciation E.g., G funds report paying principal on loans as well as interest BUT buying ST consumable assets is still buying an asset (not an expenditure) E.g., buying supplies is not expenditure until supplies consumed & buying car is expenditure This is the modified accrual method Expenditures represent payments to third parties consumption of resources E.g., inventories and prepaid items With modified accrual method accrue some expenditures Some expenditures recorded when cash is paid 35 Expenditures Expenditures - 13 Relationship Between Expenditures & Expenses G funds are interested in expenditures that are paid in the current year or shortly thereafter If payments will be made in future Items appear on GWide statements Record in General LT Debt Account Group Many expenditures in funds will be expenses in GWide statements along with LT expenses depreciation Prepaid Expenditures Prepaid expenditures are handled in same manner as with businesses Initial outlay creates an asset: D. Prepaid Rent $12,000 Prepaid Insurance 18,000 Supplies Inventory 40,000 Cr. Cash $70,000 9

10 37 Expenditures Expenditures - 16 When assets are consumed recorded as an expenditure D. Expenditures (control) $45,000 Cr. Prepaid Rent $10,000 Prepaid Insurance 15,000 Supplies Inventory 20,000 Inter-fund Transfers Called Other Financing Uses Prevents double counting of expenditures Flip side of Other Financing Sources E.g., General Fund collects taxes (Revenue) Transfers funds to Debt Service Fund (Other Financing Uses) Debt Service Fund receives funds (Other Financing Sources) Pays interest and principal (Expenditures) 39 Expenditures Expenditures 11 General Fund: D. Cash $5,000 C. Revenue $5,000 D. Other Financing Uses $5,000 C. Cash $5,000 Debt Service Fund: D. Cash $5,000 C. Other Financing Sources $5,000 D. Expenditures $5,000 C. Vouchers Payable $5,000 Voucher System When G decides to spend money It first sends vendor Purchase Order Vendor delivers item purchased along with invoice G cannot pay an invoice until it is authorized with a voucher Voucher is signed by appropriate official Expenditures are recorded when the liability is incurred and formal vouchers are executed: D. Expenditures (control) $106,800 Cr. Vouchers Payable $106,800 10

11 41 Reserved & Designated Fund Balances - Heading 42 Reserved & Designated Fund Balances - 1 Reserved Fund Balances Cos have unrestricted RE Cos can pay div out of unrestricted RE G fund equivalent of unrestricted RE is Unreserved Fund Balance Shows G fund s equity available for expenditure Resources not really available for expenditures must be removed from Unreserved Fund Balance 43 Reserved & Designated Fund Balances Reserved & Designated Fund Balances - 3 Reserved Fund Balance Remember Co restricting its RE Giving notice that equity will not be used for div G funds have similar ability G can reserve its fund balance to show it has already spent the cash E.g., money spent on assets that haven t been used up yet E.g., Assume G buys supplies Supplies not an expenditure until used up Purchase price already spent G funds not available for other expenditures If supplies exist at end of year, G fund moves amount from Unreserved Fund Balance to Reserved Fund Balance D. Fund Balance Unreserv & Undesignated $40,000 Cr. Fund Balance Reserv For Supplies $40,000 11

12 45 Encumbrances Encumbrances - 2 Encumbrances Encumbrances allow G fund to reserve its Fund Balance when the cash hasn t been spent yet, but it is in the process of spending the cash Encumbrances indicate that an expenditure has been approved but the voucher is in the works E.g., computer ordered, but not delivered yet (no voucher) G fund can transfer equity to Reserved Fund Balance This is important to G funds If G fund doesn t spend its budget during the current year maybe managers might think that it doesn t need so much next year 47 Encumbrances - 2 Assume that G wishes to purchase computer Voucher not prepared yet G can encumber the cost of the computer D. Encumbrances (control) $10,000 Cr. Fund Balance Reser for Encumbr $10, Encumbrances - 3 Why does this journal entry looks different from the journal entry when G fund reserved its Fund Balance because of its supplies? Before when G fund reserved equity debit was to Unreserved & Undesignated Fund Balanced This was done when G fund had spent the cash Now G fund debits Encumbrances G fund is in the process of spending cash 12

13 49 Encumbrances Encumbrances - 4 The answer is that Encumbrances is a contra-equity acct Encumbrances reduces Fund Balance The debit to Encumbrance is the same thing as the debit to Fund Balance Unreserved & Undesignated D. Fund Balance Unreserved & Undesig $40,000 Cr. Fund Balance Reserv for Supplies $40,000 Fund Balances: Reserved for Encumbrances $10,000 Unreserved & Undesignated $100,000 Less: Encumbrance -10,000 $90,000 $100,000 D. Encumbrances (control) $10,000 Cr. Fund Balance Reserv for Encumbr $10, Encumbrances - 5 When vendor s actual invoice is received for goods or services: Voucher prepared Encumbrance is reversed & Voucher is recorded: D. Fund Balance Reserv for Encumbrances $10,000 Cr. Encumbrances (control) $10,000 D. Expenditures (control) $10,000 Cr. Vouchers Payable $10, Encumbrances - 7 The fact that Encumbrances shows up twice might confuse some people: Fund Balances: Reserved for Encumbrances $10,000 Unreserved & Undesignated $100,000 Less: Encumbrance -10,000 $90,000 $100,000 13

14 53 Encumbrances Encumbrances - 9 To avoid this confusion G fund may close encumbrance account to unreserved & undesignated Fund Balance: D. Fund Balance Unreserved & Undesig $10,000 Cr. Encumbrances (control) $10,000 This produces a cleaner Fund Balance: Fund Balances: Reserved for Encumbrances $10,000 Unreserved & Undesignated $90,000 $100, Encumbrances Reserved & Designated Fund Balances - Heading At beg of next year, G fund would reinstate encumbrance: Designated Fund Balances D. Encumbrances (control) $10,000 Cr. Fund Balance Unres & Undesig $10,000 14

15 57 Reserved & Designated Fund Balances Reserved & Designated Fund Balances - 6 Unreserved Fund Balance is divided between designated & undesignated Designation indicates the G fund intends to spend the unreserved fund balance for some future use G designates a portion of the Unreserved Fund Balance for the acquisition of a police car D. Fund Balance Unres & Undesignated $16,000 C. Fund Balance Unres & Desig (Auto) $16, Reserved & Designated Fund Balances Governmental Borrowings - Heading Summary: Money already spent Reserved Money in process of being spent Encumbrance (Reserved) Money is intended for future use Designation Remember - reserving/designating Fund Balance No movement of cash Just like restricted RE G fund changes these amounts as circumstances change Governmental Borrowings 15

16 61 Governmental Borrowings - 1 ST Debt will appear in a Governmental fund if normally expected to be liquidated with expendable available financial resources E.g.,: Payables for Salaries, Professional services, Supplies, Utilities, & Travel. 62 Governmental Borrowings - 2 Tax anticipation notes are also ST borrowings that appear in G funds G fund knows tax receipts are coming soon E.g., property tax and income tax dates are known G fund needs cash now So, G borrows using tax receipts as security or collateral D. Supplies $5,000 C. Voucher Payables $5,000 D. Cash $5,000 C. Tax Anticipation Note Payable $5, Governmental Borrowings Governmental Borrowings - 4 LT Bonds or Notes Proceeds recorded in G funds Other Financing Sources Borrowed not Revenue Debt appears in GWide statements Recorded in General LT Debt Acct Group General LT capital debt Used to acquire capital assets other long-term economic benefits. Three Types of G funds/groups work together to acquire capital assets Capital projects fund Net proceeds recorded General LT debt Acct Group face amount recorded Debt service fund principal and interest payments 16

17 65 Delinquent Taxes & Tax Liens - Heading Delinquent Taxes & Tax Liens 66 Delinquent Taxes & Tax Liens - 1 Taxes (blue) that are not paid on time become Delinquent (yellow) G funds have to move amounts to new accounts Name change D. Taxes Receivable Delinquent $56,300 Cr. Taxes Receivable Current $56,300 D. Allow For Uncoll Current Taxes $25,000 Cr. Allow For Uncoll Delinq Taxes $25, Delinquent Taxes & Tax Liens Prior Year s Errors - Heading Delinquent taxes (yellow) that are not paid become tax liens (green) D. Tax Liens Receivable $26,300 Prior Year s Errors Cr. Taxes Receivable Delinquent $26,300 D. Allow For Uncollectible Delinquent Taxes Cr. Allow For Uncollectible Tax Liens $15,000 $15,000 17

18 69 Prior Year s Errors Prior Year s Errors - 2 Corrections for Prior Years Errors are Made directly to the Unreserved & Undesignated Fund Balance Remember that for corporations, corrections made to beginning balance of Statement of RE E.g., G fund s failure to record an Voucher in the previous year. Would have resulted in an expenditure Would have reduced the Fund Balance, & Would have created a Vouchers Payable If unpaid 71 Prior Year s Errors Fund Financial Statements - Heading To correct this, you would reduce Fund Balance, & create Vouchers Payable: Fund Financial Statements D. Fund Balance Unresd & Undesignated $30,600 Cr. Vouchers Payable $30,600 18

19 73 Fund Financial Statements - 1 G fund Financial Statements G funds usually have two FSs Balance sheet Reports CA & CL Difference between CA & CL is Fund Balance Statement of Revenues, Expenditures & Changes in Fund Balances gives details of Revenues Expenditures Other Financing Sources & Other Financing Uses 74 Extraordinary & Special Items - 1 Extraordinary & Special Rev & Expenditures Extraordinary items defined same as with businesses Extraordinary items both unusual in nature and infrequent in occurrence Special items are within the control of management and either unusual in nature or infrequent in occurrence Not both Examples of special items sale of a significant government asset 75 Extraordinary & Special Items Account Groups Assets - Heading Appearance on FS: Special items reported below non-operating revenue/expenditures Extraordinary items reported after Special items Special items not within control of management disclosed in notes to FS Account Groups - Assets 19

20 77 Account Groups - Assets - 1 Account groups Used to be required Acct groups keep track of LT assets and LT liabilities GASB Statement No. 34 doesn t require acct groups Now, G do GWide FSs G may still use acct groups to prepare GWide statements 78 Account Groups - Assets - 2 Remember G funds do not have LT assets (fixed assets) in their accts Fixed assets are reported in accts of: P fund (e.g., utility) or F fund (e.g., endowment or scholarship fund) Prop funds & Fid funds basically use GAAP P funds have to show self-sufficient (not drain on G) F funds have to distinguish between principal & income 79 Account Groups - Assets Account Groups - Assets - 4 All other fixed assets of the G are accounted for in the General Fixed Assets Account Group These are assets used in governmental operations These assets are not the assets of any particular fund When G acquires a general fixed asset 2 funds/groups are affected: The asset is listed in the General Fixed Asset Account Group The expenditure of cash for asset is recorded in the G fund 20

21 81 Account Groups - Assets Account Groups - Assets - 6 E.g., Assume: G acquires building with $200,000 of General Fund revenues: Within General Fund: Within General Fixed Assets Acct Group: D. Buildings $200,000 D. Expenditures (control) $200,000 C. Cash $200,000 C. Investmt in General Fixed Assets General Fund Revenues $200, Account Groups - Assets Account Groups - Assets - 8 General Fixed Asset Acct Group records LT Assets at: Acquired cost recorded at cost Donated assets recorded at FMV Maintenance expenditures Reported in G funds Do not increase BV of asset in acct group Same rules as GAAP When a general capital asset sold Asset removed from General Fixed Assets Acct Group Proceeds recorded in G fund (General Fund) All proceeds recorded as Other Financing Sources No gain/loss recorded in G fund G Wide FS will record gain/loss 21

22 85 Account Groups - Assets - 9 E.g., Assume: G sells equipment for $90,000, carried in the General Fixed Assets Account Group at $100,000: Within General Fund: D. Cash $90,000 C. Other Financing Sources $90, Account Groups - Assets - 10 Within General Fixed Assets Acct Group: D. Investment in General Fixed Assets General Fund Revenues $100,000 C. Machinery & Equipment $100, Account Groups - Assets - 11 G funds do not have an expenditure for depreciation Depreciation expense is recorded in proprietary & fiduciary funds Depreciation expense (and accumulated depreciation) on LT assets are recorded in GW stmts 88 Account Groups - Assets - 12 G must disclose information about LT assets in G Wide FS notes Beginning-of-the-year balance End-of-year balance Accumulated depreciation balances Capital acquisitions & Sales and other dispositions 22

23 89 Account Groups - Assets - 13 E.g.: Schedule of Capital Assets (in thousands) Beg. Bal Adds. Retrmts. End. Bal. Governmental Activities Land $8,595 $4,000 $12,595 Buildings 28,555 -$200 28,355 Improvements 10,367 10,367 Machinery & Equipment 4, Construction In Progress 17,222 17,222 Total (at historical cost) $69,130 $4,135 -$200 $73,065 Less accum. depreciation: Buildings -$850 -$85 $40 -$895 Improvements Machinery & Equipment Total -$1,215 -$155 -$40 -$1,330 Governmental Activities (net) $67,915 $3,980 -$160 $71, Account Groups - Assets - 14 G must depreciate LT assets in GWide stmts BUT, if G adopts Modified Preservation Approach G does not have to depreciate infrastructure assets Infrastructures include sidewalks, streets, curbs, and bridges Under Modified Preservation Approach, G must: Incur costs to preserve these assets Assess condition of their infrastructure assets Disclose condition in the notes to the FS 91 Account Groups - Liabilities - Heading 92 Account Groups - Liabilities - 1 Account Groups - Liabilities LT Debt isn t accounted for in G funds Although accounted for in P funds & F funds Other LT Debt recorded in the General LT Debt Acct Group 23

24 93 Account Groups - Liabilities - 2 When LT Debt is incurred Debt will be listed in General LT Debt Acct Group Proceeds of debt will appear in G funds Called Other Financing Sources 94 Account Groups - Liabilities - 3 E.g., When general bonds are issued Bonds recorded at face value in the General LT Debt Acct Group Face value used regardless of whether bonds were issued at a premium or discount Receipt of cash recorded in G fund Net proceeds recorded Include premium or reduce by discount 95 Account Groups - Liabilities Account Groups - Liabilities - 5 E.g., Assume: G issues general long-term obligation in the form of term bonds of $1,000,000 to acquire property Bonds issued at discount and only $900,000 is received Within General Fund: D. Cash $900,000 C. Other Financing Sources $900,000 Within General LT Debt Acct Group: D. Amount to Be Provided for Payment of Term Bonds $1,000,000 C. Term Bonds Payable $1,000,000 24

25 97 Account Groups - Liabilities Account Groups - Liabilities - 7 Debt Service fund Handles payment of both principal and interest The General LT Debt Acct Group Notes that funds have been received by the Debt Service Fund to pay off the Bonds General Fund transfers $80,000 to the Debt Service Fund to pay the principal of the bonds, General Fund would make the following entry: D. Other Financing Uses $80,000 C. Cash $80, Account Groups - Liabilities Account Groups - Liabilities - 9 Debt Service Fund would make the following entry: General LT Debt Acct Group would make the following entry: D. Cash $80,000 C. Other Financing Sources $80,000 D. Amount Available in Debt Service Funds Term Bonds C. Amount to Be Provided for Payment of Term Bonds $80,000 $80,000 25

26 101 Account Groups - Liabilities Account Groups - Liabilities - 11 When the Debt Service Fund pays off the Term Bonds The Debt Service Fund would make the following entry: D. Expenditures $500,000 C. Cash $500,000 General LT Debt Acct Group would make the following entry: D. Term Bonds Payable $500,000 C. Amount Available in Debt Service Funds Term Bonds $500, Leases - Heading 104 Leases - 1 Leases When G signs operating lease Rent payments are an expenditure in the appropriate fund When G signs capital lease Really financed acquisition of an asset Borrowing - borrowed the PV of the lease payments & Acquisition PV used to buy asset 26

27 105 Leases Leases - 3 E.g., Capital Lease: Within the General Fund expenditure equal to the PV of the lease payments: Within the General Fixed Asset Acct Group acquisition of the leased asset: D. Expenditures $50,000 C. Other Financing Sources $50,000 D. Leased Asset $50,000 C. Investment in General Fixed Assets General Funds $50, Leases Employee Compensation Liabilities - Heading Within the General LT Debt Acct Group: Employee Compensation Liabilities D. Amount To Be Provided For Leased Obligation $50,000 C. Lease Obligation $50,000 27

28 109 Employee Compensation Liabilities Employee Compensation Liabilities - 2 With respect to compensation liabilities: Funds: Current Liabilities General LT Debt Acct Group: LT Liabilities Future unfunded compensated absences usually Not reported in a G fund Noted in the General LT Debt acct group: D. Amount To Be Provided For Payment of Compensated Absences C. Unfunded Compensated Absences $75,000 $75, Employee Compensation Liabilities Budget Accounts - Heading Future portion of the Actuarial Required Contribution (ARC) usually Not reported a G fund Noted in the General LT Debt Acct Group: Budget Accounts D. Amount To Be Provided For $30,000 Payment of Pension Obligation C. Unfunded Pension Obligation $30,000 28

29 113 Fund Financial Statements Budget Accounts - 1 Budgets are very important to Gs G is only supposed to spend budgeted amount If G fund legally adopts annual budget G fund must compare actual results to budget in the G funds FS Comparison done in schedule or separate statement Budgets are built into accounting system in order to compare actual results to budgeted amounts Helps to make sure that budgets are followed 115 Budget Accounts - 2 E.g., Assume General Fund adopts following budget: Estimated Revenue: $97,000 Estimated Other Fin. Sources: $5,000 Total Funds: $102,000 Estimated Expenditures: $105,000 Deficit -$3, Budget Accounts - 3 These are budgetary accts They are control accts Like A/R entries are made in sub accts D. Estimated Revenues (control) Estimated Other Financing Sources (control) $97,000 5,000 Budgetary Fund Balance 3,000 C. Appropriations (control) $105,000 29

30 117 Budget Accounts - 4 Budget entries are on the wrong side Rev accts are debited Rev normally have credit balance Debit sits on wrong side Used to tell whether over or under budget Expenditures (Appropriations) are credited Exp normally have debit balance Credit sits on wrong side Used to tell whether over or under budget 118 Budget Accounts - 5 E.g., Assume: G budgeted $82,000 of property tax receipts Budget entry is on wrong (debit) side. G received $85,00 in property taxes Entry for revenue on credit side G collected $3,000 more than budget estimate Revenues Property Tax (1) Budget Entry $82,000 (2) Tax Levy $85,000 Balance 3, Budget Accounts Budget Accounts - 7 Estimated Revenue figure will be debited to: Revenues Property Tax Revenues Fines Revenues Licenses Estimated Other Financing Sources will be debited to Other Financing Sources Asset Sale Appropriations figure will be credited to: Expenditures Salary Expenditures Supplies Expenditures Repairs Expenditures Capital Expenditures Miscellaneous 30

31 121 Budget Accounts Budget Accounts - 9 At the end of the period, you reverse the budgetary entry These will remove budget amounts from accts after comparison to actual results D. Appropriations (control) $105,000 Cr. Estimated Revenues (control) Estimated Other Financing Sources (control) $97,000 5,000 Budgetary Fund Balance 3,000 During year, G can change its estimates E.g., G can enact new tax This would cause change to: Est Rev amount and Budgetary Fund Balance Surplus & Deficit 123 Budget Accounts - 10 Assume that a new tax is enacted which is expected to bring in an additional $9,000 in revenues: D. Estimated Revenues (control) $9,000 Cr. Budgetary Fund Balance $9,000 31