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What is the journal entry to record a budget deficit?

Under budgetary accounting (governmental funds only), the individual funds will always record their “estimated revenues” — always debited (the $850,000). This will always be credited with appropriation control which represents the total amount that the government has set aside to spend (the $1,000,000).

Therefore, the budget control is going to represent the difference between the governmental unit’s cash inflow (estimated revenue) and its cash outflow (appropriations). If they expect to generate more revenue than they set aside to spend, it will be debited, and if they set aside to spend more than they expect to bring in it will be credited.

In a budget deficit, the entity expects to spend more than they will bring in, so there is a debit to budgetary control for $150,000.

Make sure you understand the journal entry for a budget surplus!


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