Interim Budgetary Comparison Statement

An interim budgetary comparison statement for a governmental fund is found in Illustration 3-4

. (a) Should this statement be prepared on the unit's budgetary basis or on the GAAP basis? Why?

(b) Why are interim budgetary comparison statements important to effective management control and legislative oversight?

ILLUSTRATION 3-4 Expenditure Cycle City council approves the fiscal year budget for the General Fund City departments issue purchase orders for goods and services Goods and services are received and invoices are presented for payment Journal Entries - Budgetary Accounts Estimated Revenues .... Dr Estimated Other Financing Sources .... Dr Appropriations Estimated Other Financing Uses ................Cr Budgetary Fund Balance... Cr Record the budget Encumbrances Control .... Dr Budgetary Fund Balance- Reserve for Encumbrances... Cr Budgetary Fund Balance- Reserve for Encumbrances... Dr Encumbrances Control Cr To establish the encumbrance To reverse the encumbrance Journal Entries - Financial Statement Accounts No entry Expenditures (Current) ... Dr Accounts Payable Cr No entry To record the liability ILLUSTRATION 3-4 Expenditure Cycle City council approves the fiscal year budget for the General Fund City departments issue purchase orders for goods and services Goods and services are received and invoices are presented for payment Journal Entries - Budgetary Accounts Estimated Revenues .... Dr Estimated Other Financing Sources .... Dr Appropriations Estimated Other Financing Uses ................Cr Budgetary Fund Balance... Cr Record the budget Encumbrances Control .... Dr Budgetary Fund Balance- Reserve for Encumbrances... Cr Budgetary Fund Balance- Reserve for Encumbrances... Dr Encumbrances Control Cr To establish the encumbrance To reverse the encumbrance Journal Entries - Financial Statement Accounts No entry Expenditures (Current) ... Dr Accounts Payable Cr No entry To record the liability