The city amended its budget to increase grant revenues and increase expenditures by the same amount. The correct budget-amendment journal entry effect is:

• A. There will be a net increase to Budgetary Fund Balance
• B. There will be a net decrease to Budgetary Fund Balance
• C. There will be a partial net adjustment to Budgetary Fund Balance
• D. There will be no net adjustment to Budgetary Fund Balance

Answer: (D)

Budgetary accounting in governmental funds hinges on the relationship between estimated revenues and appropriations, with Budgetary Fund Balance reflecting the difference between the two. When a budget amendment increases grant revenues and also increases expenditures by the same amount, both sides of that equation rise equally. The journal entry moves the estimated revenues (up) and the appropriations or expenditures (up) by the same figure, so the difference between them—the Budgetary Fund Balance—remains unchanged. Therefore, there is no net adjustment to Budgetary Fund Balance. This highlights that the amendment affects planning and control accounts, not the budgetary balance itself. If only one side were adjusted, you would see a net change in the budgetary fund balance.