ExpertHard1 markMultiple Choice
CPA · Question 50 · Area III: State & Local Governments
A City adopts its budget for the year:<br/>- Estimated Revenues: $5,000,000<br/>- Appropriations: $4,800,000<br/>- Estimated Other Financing Uses (Transfer Out): $100,000<br/><br/>What is the journal entry to record the adoption of the budget?
A City adopts its budget for the year:<br/>- Estimated Revenues: $5,000,000<br/>- Appropriations: $4,800,000<br/>- Estimated Other Financing Uses (Transfer Out): $100,000<br/><br/>What is the journal entry to record the adoption of the budget?
Answer options:
A.
DR Estimated Revenues $5M; CR Appropriations $4.8M; CR Est. Other Financing Uses $0.1M; CR Budgetary Fund Balance $0.1M
B.
DR Appropriations $4.8M; DR Est. Other Financing Uses $0.1M; CR Estimated Revenues $5M
C.
DR Estimated Revenues $5M; CR Appropriations $4.9M; CR Budgetary Fund Balance $0.1M
D.
DR Budgetary Fund Balance $0.1M; DR Appropriations $4.8M; CR Estimated Revenues $5M
How to approach this question
Budget Entry: DR Estimated Revenues (What we hope to get). CR Appropriations (What we are allowed to spend). Plug difference to Budgetary Fund Balance.
Full Answer
A.DR Estimated Revenues $5M; CR Appropriations $4.8M; CR Est. Other Financing Uses $0.1M; CR Budgetary Fund Balance $0.1M✓ Correct
The budget entry sets up the control accounts. Estimated Revenues (DR) $5M. Appropriations (CR) $4.8M. Est Transfer Out (CR) $0.1M. The difference ($100k surplus) is a Credit to Budgetary Fund Balance.
Common mistakes
Reversing debits and credits.
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