Chapter Three

Governmental Operating Statement Accounts; Budgetary Accounting

Learning Objectives
After studying this chapter, you should be able to:

1. Explain how operating revenues and expenses related to governmental activities are classified
and reported in the government-wide financial statements.
2. Distinguish, at the fund level, between Revenues and Other Financing Sources and between
Expenditures and Other Financing Uses.
3. Explain how revenues and expenditures are classified in the General Fund.
4. Explain how budgetary accounting contributes to achieving budgetary control over revenues
and expenditures, including such aspects as:
• Recording the annual budget.
• Accounting for revenues.
• Accounting for encumbrances and expenditures.
• Accounting for allotments.

CLASSIFICATION AND REPORTING OF EXPENSES AND REVENUES AT THE

GOVERNMENT-WIDE LEVEL

Reporting Direct and Indirect Expenses

Except for extraordinary or special item expenses, described later in this section, expenses
generally are reported by function or program.

Direct expenses—those that are specifically associated with a function or program should be
reported on the line for that function or program.

Indirect expenses -those that are not directly linked to an identifiable function or program can be
reported in a variety of ways. A typical indirect expense is interest on general long-term liabilities

Program Revenues and General Revenues

program revenues are reported in the functions/programs section of the statement of activities,
where they reduce the net expense of each function or program or produce a net revenue.

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General revenues are not directly linked to any specific function or program and thus are reported
in a separate section in the lower portion of the statement

Three categories of program revenues are reported in the statement of activities charges for
services, operating grants and contributions, and capital grants and contributions.

• Charges for services include charges to customers or others for both governmental and
business-type activities. Charges for services within the governmental activities category
include items such as licenses and permits fines and forfeits, and operating special
assessments
• grants and contributions -GASB requires that multipurpose grants and contributions be
reported as program revenues if “the amounts restricted to each program are specifically
identified in either the grant award or grant application.” Otherwise, multipurpose grants
and contributions should be reported as general revenue.
• capital grants and contributions -Unrestricted earnings from permanent funds,
endowments should be reported as general revenue. In addition, all taxes, even those
specified by law for a particular use (for example, motor vehicle fuel taxes that can be used
only for road and bridge purposes), should be reported as general revenue.

Reporting Special Items and Transfers

In the GASBS 34 reporting model, extraordinary items and special items must be reported as
separate line items below General Revenues in the statement of activities to distinguish these
nonrecurring items from normal recurring general revenues. Separate reporting of such items
serves to inform citizens and other report users when governments engage in the unusual practice
of balancing their budget by selling government assets or other similar practices

Extraordinary items are defined in the same manner as in business accounting: “transactions or
other events that are both unusual in nature and infrequent in occurrence.”

Special items are items within management’s control that may be either unusual in nature or
infrequent in occurrence but not both. An example of a special item is one-time revenue from the
sale of a significant governmental asset, and such as a loss due to civil riot.

STRUCTURE AND CHARACTERISTICS OF THE GENERAL FUND;

CLASSIFICATION AND DESCRIPTION OF OPERATING STATEMENT ACCOUNTS

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The General Fund has long been the accounting entity of a state or local government that accounts
for current financial resources raised and expended for the core governmental services provided to
the citizenry. The General Fund is sometimes known as an operating fund or current fund;

Governmental Fund Balance Sheet and Operating Statement Accounts

It should be emphasized that the General Fund and all other funds classified as governmental funds
account for only current financial resources (cash, receivables, marketable securities, and, if
material, prepaid items and inventories). Economic resources, such as land, buildings, and
equipment utilized in fund operations, are not recorded by these funds because they are not
normally converted into cash. Similarly, governmental funds account for only those liabilities
incurred for normal operations that will be liquidated by use of fund assets.

The arithmetic difference between the amount of financial resources and the amount of liabilities
recorded in the fund is the fund equity, usually referred to as fund balances (also referred to as
Unreserved Fund Balance) which is the portion of fund equity available for spending.

In addition to the balance sheet accounts just described, the General Fund accounts for financial
transactions during a fiscal year in operating statement accounts classified as Revenues, Other
Financing Sources, Expenditures, and Other Financing Uses.

• Revenue is defined as increases in fund financial resources other than from financing
sources such as inter-fund transfers and debt issue proceeds.
• other financing sources -Transfers into a fund and debt issue proceeds received by a fund
are examples of inflows classified as other financing sources of the fund.
• Expenditure is a word that represents the cost to purchase a good or service, whereas
expense represents the cost of a good or service consumed during the period. Recall that
governmental funds are concerned only with flows of current financial resources, not with
determination of income or cost of services. Thus, governmental funds report expenditures,
not expenses. In fact, the word expenditure is defined as a decrease in a fund’s current
financial resources other than from inter-fund transfers.
• Other financing uses, or transfers of financial resources from one fund to another fund,
have the same effect on fund balance as expenditures: Both decrease the fund balance at
year-end when the temporary accounts are closed.

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 Format of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances

GASB standards require that the operating statement accounts of a governmental fund, such as the
General Fund, be recognized on the modified accrual basis of accounting. Under this basis,
revenues and other financing sources are recognized if they are measurable and available.
Available means that the revenue or other financing source is expected to be collected during the
current period or soon enough thereafter to pay current period obligations. In the case of property
taxes, GASB requires expected collection within 60 days after the end of the current fiscal year
for the taxes to be recognized as a current-period revenue. Thus, if a portion of the current tax levy
is not expected to be collected within 60 days, it would be recorded in the current period as a credit
to Deferred Revenues (a current liability). In the following year, Deferred Revenues would be
debited and Revenues would be credited. For all other categories of revenues, as well as for other
financing sources, governments have the discretion to determine the length of time used to define

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available (generally not more than 90 days after the current fiscal year-end) but must disclose their
policy in the notes to the financial statements

Comparison of Balance Sheet, Operating Statement, and Budgetary Accounts

The next section introduces the use of budgetary accounts in the General Fund and certain other
governmental fund types that may be included in the governmental unit’s formal budget. it is
recommended that you review Illustration below, which displays the relationship between
budgetary accounts and the balance sheet and operating statement accounts of the General Fund.
Two points should be noted in reviewing Illustration below:

(1) Both the operating statement accounts and the budgetary accounts are sub-fund equity
temporary accounts that are closed to Fund Balance at year-end.
(2) Each operating statement account has a budgetary counterpart: Revenues and Estimated
Revenues; Expenditures and both Appropriations and Encumbrances , Other Financing

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 Sources and Estimated Other Financing Sources; and Other Financing Uses and Estimated
Other Financing Uses.

NA _ Not applicable, since there is no corresponding operating statement account.

*OFS _ Other Financing Sources.

Relationship between Budgetary and Operating Statement Accounts

BUDGETARY ACCOUNTS

The fact that budgets are legally binding upon administrators has led to the integration of budgetary
accounts into the general ledgers of the General Fund and special revenue funds, and all other
funds that are required by state laws to adopt a budget. In order to achieve budgetary control, only
three general ledger budgetary control accounts are needed in the General Fund (and other funds
for which a budget is adopted): Estimated Revenues, Appropriations, and Encumbrances.
Subsidiary ledger accounts should be provided in whatever detail is required by law or for sound
financial administration to support each of the three control accounts. Budgeted inter-fund
transfers and debt proceeds may be recorded in two additional budgetary control accounts:

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Estimated Other Financing Sources and Estimated Other Financing Uses. Again, these control
accounts should be supported by subsidiary detail accounts as needed.

TERMINOLOGY AND CLASSIFICATION FOR GOVERNMENTAL FUND BUDGETS

AND ACCOUNTS

Budgets may be described as legally approved plans of financial operations embodying the
authorization of expenditures for specified purposes to be made during the budget period and the
proposed means of financing them.

Classification of Appropriations and Expenditures

An appropriation is a legal authorization to expend cash or other financial resources for goods,
services, and facilities to be used for specified purposes, in amounts not to exceed those authorized
for each purpose. When liabilities authorized by an appropriation have been incurred, the
appropriation is said to be expended. Thus, budgeted appropriations are sometimes called
estimated expenditures. Expenditures, then, are expended appropriations. According to GASB
standards, expenditures should be classified by (1) fund, (2) function or program, (3) organization
unit, (4) activity, (5) character, and (6) object. A common terminology and classification should
be used consistently throughout the budget, the accounts, and the financial reports of each fund.

1. Classification by Fund; The primary classification of governmental expenditures is by fund,

since a fund is the basic fiscal and accounting entity of a government
2. Classification by Function or Program ;The GASB distinguishes between functions and
programs in the following manner:

Functions group related activities that are aimed at accomplishing a major service or regulatory
responsibility. Programs group activities, operations, or organizational units that are directed to
the attainment of specific purposes or objectives

Examples of common functional classifications are the following:

• General Government • Culture and Recreation

• Health and Welfare • Highways and Streets
• Public Safety

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3. Classification by Organization Unit ; is considered essential to management control,
assuming the organizational structure of a given government provides clear lines of
responsibility and authority. Some examples of organization units that might be found in a city
are:
• Police Department • Personnel Department
• City Attorney • Public Works Department
• Fire Department • Parks and Recreation Department
• Building Safety Department
4. Classification by Activity
An activity is a specific and distinguishable line of work performed by an organization unit. For
example, within the public works department, activities such as the following may be performed:
• Solid waste collection—residential • Solid waste disposal—landfill
• Solid waste collection—commercial • Solid waste disposal—incineration
5. Classification by character ;as defined by the GASB, is based on the fiscal period that
benefits from a particular expenditure. A common classification of expenditures by character
recognizes three groups:
• Current expenditures
• Capital outlays
• Debt service
Current expenditures are expected to benefit the period in which the expenditure is made.
Capital outlays are expected to benefit not only the period in which the capital assets are acquired
but as many future periods as the assets provide service. Debt service includes payment of interest
on debt and payment of debt principal; if the debt has been wisely incurred, residents have received
benefits in prior periods from the assets acquired by use of debt financing, are receiving benefits
currently, and will continue to receive benefits until the service lives of the assets expire.
6. Classification by Object; The object of an expenditure is the thing for which the expenditure
was made. Object classes may be viewed as subdivisions of character classifications. One
scheme of object classification includes the following major classes
• Personal services
• Capital outlays • Debt service
• Supplies • Other services and charges

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 Classification of Estimated Revenues and Revenues
In order for administrators to determine that proposed expenditures presented in the operating
budget can be financed by resources available under the laws of the budgeting jurisdiction and
higher jurisdictions, revenue forecasts must be prepared
Revenue, in the sense in which it is customarily used in governmental budgeting, includes all
financial resource inflows all amounts that increase the net assets of a fund. Examples include
inter-fund transfers and debt issue proceeds, as well as taxes, licenses and permit fees, fines,
forfeits, and other revenue sources
The primary classification of governmental revenue is by fund. Within each fund, the major
classification is by source. Within each major source class, it is desirable to have as many
secondary classes as needed to facilitate revenue budgeting and accounting. Secondary classes
relating to each major source are discussed below under each source caption. Major revenue source
classes commonly used are these:
• Taxes • Licenses and Permits
• Charges for Services • Miscellaneous Revenues
• Special Assessments • Intergovernmental Revenues
• Fines and Forfeits
a) Taxes; are of particular importance because (1) they provide a large portion of the revenue
for all levels of government and (2) they are compulsory contributions to finance the cost of
government.
Ad valorem (based on value) property taxes are a mainstay of financing for many local
governments but are not used as a source of revenue by many state governments or by the
federal government. Ad valorem taxes may be levied against real property and personal
property. Other kinds of taxes are sales taxes, income taxes, gross receipts taxes, death and
gift taxes, and interest and penalties on delinquent taxes.
b) Interest and Penalties on Delinquent Taxes; A penalty is a legally mandated addition to a
tax on the day it becomes delinquent (generally, the day after the day the tax is due). Penalties
should be recognized as revenue when they are assessed. Interest at a legally specified rate
also must be added to delinquent taxes for the length of time between the day the tax becomes
delinquent until the day it is ultimately paid or otherwise discharged; interest revenue should
be accrued at the time financial statements are to be prepared.

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c) Sales Taxes, Income Taxes, and Gross Receipts Taxes; taxes be recognized, net of estimated
refunds, in the accounting period in which underlying transactions (e.g., sales and earnings)
occur.
d) Special assessments differ from ad valorem real property taxes in that the latter are levied against
all taxable property within the geographic boundaries of the government levying the taxes,
whereas the former are levied against certain properties. The purpose of a special assessment
is to defray part or all of the cost of a specific improvement or service that is presumed to be
of particular benefit to the properties against which the special assessments are levied. E.g.
street cleaning, snow plowing, and so on.
e) Licenses and permits include those revenues collected by a government from individuals or
business concerns for various rights or privileges granted by the government. Licenses and
permits may relate to the privilege of carrying on business for a stipulated period, the right to
do a certain thing that may affect the public welfare, or the right to use certain public property.
Vehicle and alcoholic beverage licenses are found extensively on the state level and serve both
regulatory and revenue functions. Commonly found among licenses and permits are building
permits, vehicle licenses, amusement licenses, business and occupational licenses, animal
licenses, and street and curb permits.
f) Intergovernmental revenues include grants and other financial assistance. These may be
government-mandated nonexchange transactions (for example, certain state sales taxes
required by law to be shared with local governments) or voluntary nonexchange transactions
(for example, federal or state grants for which local governments compete). In either case, the
recipient government does not provide significant value to the grantor government for value
received. GASB defines grants and other financial assistance as
transactions in which one governmental entity transfers cash or other items of value
to [or incurs a liability for] another governmental entity, an individual, or an
organization as a means of sharing program costs, subsidizing other governments or
entities, or otherwise reallocating resources to the recipients

Governmental funds should recognize grants and other financial assistance as revenues
in the period in which all time restrictions and eligibility requirements (such as a
matching requirement) imposed by the grantor government have been met and the
resources are available to pay current period obligations.

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g) charges for services of the governmental funds (and governmental activities at the
government-wide level) include all charges for goods and services provided by a
governmental fund to enterprise funds, individuals and organizations, and other
governments. A few of the many revenue items included in this category are court costs;
special police service; solid waste collection charges; street, sidewalk, and curb repairs;
receipts from parking meters; library use fees (but not fines); and tuition.
h) Fines and Forfeits; Revenue from fines and forfeits includes fines and penalties for
commission of statutory offenses and for neglect of official duty; forfeitures of amounts
held as security against loss or damage, or collections from bonds or sureties placed with
the government for the same purpose; and penalties of any sort, except those levied on
delinquent taxes.
i) Miscellaneous Revenues; It (1) substitutes for other possible source classes that might
have rather slight and infrequent usage and (2) minimizes the need for forcing some kinds
of revenue into source classifications in which they do not generically belong. While
miscellaneous revenues in itself represents a compromise, its existence aids in sharpening
the meanings of other source classes. The heterogeneous nature of items served by the
title is indicated by the diversity of items found in this category: interest earnings (other
than on delinquent taxes); rents and royalties; sales of, and compensation for loss of,
capital assets; contributions from public enterprises (utilities, airports, etc.); escheats
(taking of property in default of legally qualified claimants); contributions and donations
from private sources; and “other.”

BUDGETARY ACCOUNTING
The general ledger accounts needed to provide appropriate budgetary control are Estimated
Revenues, Appropriations, Estimated Other Financing Sources and Estimated Other Financing
Uses control accounts, supported by subsidiary accounts as needed.

At the beginning of the budget period, the Estimated Revenues control account is debited for the
total amount of revenues expected to be recognized, as provided in the Revenues budget. The
amount of revenue expected from each source specified in the Revenues budget is recorded in a
subsidiary ledger account so that the total of subsidiary ledger detail agrees with the debit to the
control account, and both agree with the adopted budget. If a separate entry is to be made to record

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the Revenues budget, the general ledger debit to the Estimated Revenues control account is offset
by a credit to Budgetary Fund Balance. The account title, Budgetary Fund Balance, is used through
the text to identify journal entries to establish or amend the budget. In practice, many governments
make budget entries directly to Fund Balance. Since the budgetary accounts are closed at year-
end, the choice of account title has no financial statement effect.

BUDGETARY ACCOUNTING ILLUSTRATED

Budgets And Budgetary Accounts

The fact that budgets are legally binding upon administrators has led to the incorporation of
budgetary accounts in the General Fund and in special revenue funds for which annual budgets
are adopted.
As indicated earlier, governments are required to report budget-actual comparisons as schedules
in Required Supplementary Information. Governments may elect instead to provide those
comparisons as one of the basic statements rather than as a schedule. The schedule (or statement)
must provide the original budget; the final budget; and the actual amounts of revenues,
expenditures, and other financing sources and uses. A variance column between the final budget
and actual amounts is encouraged but not required. The format of the schedule (or statement)
may be that of the budget document, or in the form used for the Statement of Revenues,
Expenditures, and Changes in Fund Balances (see Illustration 2–16).
Whichever approach is used, the amounts in the Actual column are to be reported on the basis
required by law for budget preparation, even if that basis differs from the basis provided in
GASB standards. For example, in some states revenues must be budgeted on the cash basis. If
the Budget and Actual columns of the budget- actual comparison schedule differ from GASB
standards, the heading of the statement should so indicate. Standards further require that, either
on the face of the budgetary comparison schedule or in a separate schedule, the amounts in the
Actual column of the budgetary comparison schedule must be reconciled with the amounts shown
in the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances prepared
in conformity with GAAP.
To facilitate preparation of the budgetary comparison schedule, account- ing systems of
governmental funds incorporate budgetary accounts. The general ledger accounts needed
to provide appropriate budgetary control are Estimated Revenues, Appropriations, Estimated

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Other Financing Sources and Estimated Other Financing Uses control accounts, supported by
subsidiary accounts as needed.
At the beginning of the budget period, the Estimated Revenues control account is debited for the
total amount of revenues expected to be recognized, as provided in the Revenues budget. The
amount of revenue expected from each source specified in the Revenues budget is recorded in a
subsidiary ledger account so that the total of subsidiary ledger detail agrees with the debit to the
control account, and both agree with the adopted budget. If a separate entry is to be made to
record the Revenues budget, the general ledger debit to the Estimated Revenues control account
is offset by a credit to Budgetary Fund Balance. The account title, Budgetary Fund Balance, is
used through the text to identify journal entries to establish or amend the budget. In practice,
many governments make budget entries directly to Fund Balance. Since the budgetary accounts
are closed at year-end, the choice of account title has no financial statement effect.
The credit balance of the Budgetary Fund Balance account is the total amount expected to be
available to finance appropriations. Consequently, the accounting entry to record the legally
approved appropriations budget is a debit to Budgetary Fund Balance and a credit to
Appropriations for the total amount appropriated for the activities accounted for by the fund.
The Appropriations control account is supported by a subsidiary ledger kept in the same
detail as provided in the appropriations ordinance, so that the total of the subsidiary ledger
detail agrees with the credit to the Appropriations control account, and both agree with the
adopted budget.
Recording the Budget
Assume the amounts appearing below have been legally approved as the budget for the General
Fund of a city government for the fiscal year ending December 31, 2012. As of January 1, 2012,
the first day of the fiscal year, the total Estimated Revenues should be recorded in the General
Fund general ledger accounts, and the amounts that are expected to be recognized during the
year from each revenue source specified in the budget should be recorded in the subsidiary ledger
accounts. If the budget provided for other financing sources, such as transfers in, Entry 1
would indicate a debit to Estimated Other Financing Sources. An appropriate entry would be as
follows

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Subsidiary ledgers provide for the capture of detailed data specific to a business process.. To
save space throughout future chapters, we will demonstrate journal entries using control accounts
to summarize revenue, expenditure, encumbrance, and budgetary accounts as if subsidiary ledgers
are in use. These summarized postings are adequate to demonstrate the accounting concepts
addressed.

The total Appropriations legally approved for 2012 for the General Fund of the same governmental
unit should also be recorded in the General Fund general ledger accounts, and the amounts that
are appropriated for each function itemized in the budget should be recorded in subsidiary ledger
accounts. An appropriate entry would be as follows:

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 It is acceptable to combine the two entries illustrated and make one General Fund entry to
record Estimated Revenues, Appropriations, and Estimated Other Financing Uses; in this case
there would be a credit to Budgetary Fund Balance for $50,000 (the amount by which Estimated
Revenues exceeds Appropriations and Estimated Other Financing Uses).

Accounting for Revenues

During a fiscal year, actual revenues should be recognized in the general ledger accounts of
governmental funds by credits to the Revenues Control account (offset by debits to receivable
accounts for revenues susceptible to accrual or by debits to Cash for revenues that are recognized
when the cash is collected). The general ledger Revenues Control account supported by Revenues
subsidiary ledger accounts is kept in exactly the same detail as kept for the Estimated Revenues
subsidiary ledger accounts. For example, assume that the General Fund of the government for
which budgetary entries are illustrated in the preceding section collected revenues in cash from
the following sources in these amounts:

Periodically throughout the year, elected officials and government managers will compare
Estimated Revenue subsidiary accounts with actual Revenues subsidiary accounts. If revenues fail
to reach the levels anticipated when the budget was enacted, budget revisions may be warranted
to prevent the government from deficit spending. Illustration 3–6 shows the Licenses and Permits
Revenue subsidiary ledger in a typical spreadsheet format. Because Estimated Revenues are
recorded with debits and actual Revenues with credits, summing the two amounts provides a mea-
sure of the variance from expectations. In this case, Licenses and Permits Revenue did not meet
expectations and a budget revision was deemed necessary. Since the budget is recorded at the

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beginning of the year and actual revenues are recognized throughout the year, Estimated Revenues
Not Yet Realized will commonly have a net debit balance

NAME OF GOVERNMENT
Revenues Ledger
General Fund: Licenses and Permits Revenue 2012 Fiscal Year

ILLUSTRATION 3–6 Revenues Ledger

Accounting for Encumbrances and Expenditures
An appropriation is considered to be expended when authorized liabilities are incurred. Purchase
orders and contracts are commitments that will result in liabilities when the goods or services
are received or the contracts executed. Such expected liabilities are called encumbrances. In
order to keep track of purchase orders and contracts outstanding, it is recommended that the
Encumbrance Control account (and the subsidiary account for the specific appropriation
encumbered) be debited and the Budgetary Fund Balance—Reserve for Encumbrances account
credited for the amount of each purchase order or contract issued.
When goods or services are received, two entries are necessary: (1) Budgetary Fund Balance—
Reserve for Encumbrances is debited, and Encumbrances Control (and the proper subsidiary
account) is credited for the amount entered in these ac- counts when the encumbrance
documents were issued; and (2) Expenditures Control (and the proper subsidiary account) is
debited and a liability account is credited for the amount to be paid. In order to accomplish the
necessary matching of Appropriations, Encumbrances, and Expenditures, it is necessary that
subsidiary ledger classifications of all three correspond exactly.
The following entries illustrate accounting for Encumbrances and Expenditures for the General
Fund. Entry 4 reflects purchase orders issued pursuant to the authority contained in the General
Fund appropriations; assumed amounts chargeable to each function for which purchase orders

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are issued on this date are shown in the debits to the Encumbrances subsidiary accounts

Entries 5a and 5b illustrate entries required to record the receipt of some of the items for which
purchase orders were recorded in Entry 4. Note that Entry 4 is made for the amounts estimated at
the time purchase orders or other commitment documents are issued. When the purchase orders
are filled, the actual amount approved by the government for payment to the supplier often
differs from the estimated amount recorded in the Encumbrances account (and subsidiary
ledger accounts) because some items may have been unavailable, prices of items have changed,
and so on. Since the Encumbrances Control account was debited in Entry 4 for the estimated
amount, the Encumbrances Control account must be credited for the same estimate, to the extent
that purchase orders are filled (or canceled). The balance remaining in the Encumbrances
Control account, therefore, is the estimated dollar amount of purchase orders outstanding.

Entry 5a shows the entry necessary on the assumption that most purchase orders recorded in
Entry 4 have now been filled but purchase orders for general government and education remain
outstanding. Expenditures, however, should be recorded at the actual amount the government
agrees to pay the vendors who have filled the purchase orders. Entry 5b shows the entry
necessary to record the liability for invoices approved for payment. The fact that estimated and
actual amounts differ causes no accounting difficulties as long as goods or services are received
in the same fiscal period as ordered.

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 Reserve for Encumbrances. . . . . . . . . . . . 492,300
Encumbrances Control . . . . . . . . . . . . . . 492,300
Encumbrances Ledger:. . . . . . . . . . . . . . . .
General government . . . . . . . . . . . . . . . . $ 68,300
Public safety . . . . . . . . . . . . . . . . . . . . . . 115,100
Highways and streets . . . . . . . . . . . . . . . 34,600
Sanitation . . . . . . . . . . . . . . . . . . . . . . . . 29,300
Health . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500
Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . 18,700
Culture and recreation . . . . . . . . . . . . . . 14,800
Education . . . . . . . . . . . . . . . . . . . . . . . . 195,000
5b. Expenditures Control . . . . . . . . . . . . . . . . . 491,800
Accounts Payable . . . . . . . . . . . . . . . . . . . 491,800
Expenditures Ledger:
General government . . . . . . . . . . . . . . . . $ 69,100
Public safety . . . . . . . . . . . . . . . . . . . . . . 115,100
Highways and streets . . . . . . . . . . . . . . . 34,400
Sanitation . . . . . . . . . . . . . . . . . . . . . . . . 29,300
Health . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,600
Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . 18,700
Culture and recreation . . . . . . . . . . . . . . 14,800
Education . . . . . . . . . . . . . . . . . . . . . . . . 193,800
Budget Revisions

In most cases, governments will prepare and adopt budget revisions. Assume the government in
this example decided to revise the Estimated Revenues budget downward by $36,000 and the
Appropriations Budget upward by $8,000:

References
• Earl R. Wilson, Jacqueline L. Reck,Susan C. Kattelus.— Accounting for governmental and
nonprofit entities Fifteenth ed. / Published by McGraw-Hill/Irwin, a business unit of The McGraw-
Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2010.

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• Copley, Paul A.2011 Essentials of accounting for governmental and not-for-profit
organizations,10th ed. Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill
Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2011

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