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.
