Definition:

Budgetary accounts are a type of accounting system used by governments and non-profit organizations to track their income and expenses against a predetermined budget. They are designed to ensure that spending stays within approved limits and that resources are used efficiently.

Key characteristics of budgetary accounts:

  • Governmental and non-profit use: Budgetary accounts are primarily used by governments and non-profit organizations.
  • Predetermined budget: A budget is established at the beginning of a fiscal year, outlining expected income and expenses.
  • Tracking and control: Budgetary accounts are used to track actual income and expenses against the budgeted amounts, allowing for control and oversight.
  • Fund accounting: Budgetary accounts often use a system of fund accounting, which separates funds based on their purpose or source.
  • Reporting: Budgetary accounts are used to prepare financial reports that compare actual results to budgeted amounts.

Why are budgetary accounts used?

  • Accountability: Budgetary accounts help to ensure that public funds are used responsibly and efficiently.
  • Transparency: They can improve transparency and accountability by providing information about how public funds are being spent.
  • Financial control: Budgetary accounts can help to prevent overspending and ensure that resources are used effectively.
  • Decision-making: Budgetary accounts can be used to inform decision-making about resource allocation and spending priorities.

In essence, budgetary accounts are a specialized accounting system used by governments and non-profit organizations to track income and expenses against a predetermined budget. They are a valuable tool for ensuring accountability, transparency, and financial control.