Definition:

A budgetary entry is a journal entry made to record the budgeted amounts of revenue and expenses for a government or non-profit organization. It’s a way to establish a baseline for comparison with actual results.

Key characteristics of budgetary entries:

  • Estimated amounts: Budgetary entries record estimated amounts of revenue and expenses, based on the approved budget.
  • No cash flow impact: Budgetary entries do not involve actual cash inflows or outflows.
  • Comparison to actual results: Budgetary entries are used to compare budgeted amounts to actual results, which helps to identify variances and assess the effectiveness of the budget.
  • Budgetary accounting: Budgetary entries are a key component of budgetary accounting systems, which are used by governments and non-profit organizations.

Why are budgetary entries important?

  • Planning and control: Budgetary entries are essential for financial planning and control, as they provide a baseline for comparison with actual results.
  • Accountability: Budgetary entries can help to ensure accountability by showing how public funds are being used.
  • Decision-making: Budgetary entries can be used to inform decision-making about resource allocation and spending priorities.

In essence, budgetary entries are journal entries that record the budgeted amounts of revenue and expenses, and they are a crucial component of budgetary accounting systems.