When the budget for the General Fund is recorded, the required journal entry will include which of the following?

• A. Debit Budgetary Fund Balance
• B. Credit Budgetary Fund Balance
• C. Either a debit or credit to Budgetary Fund Balance, as appropriate
• D. No entry is needed

Answer: (C)

When a government records its adopted budget, budgetary accounts are used to reflect the plan for resources and the appropriation of those resources. Budgetary Fund Balance serves as the balancing account that captures the difference between estimated resources and appropriations. The direction of the entry depends on which side is larger: if estimated resources exceed appropriations, Budgetary Fund Balance is increased (credit); if appropriations exceed estimated resources, Budgetary Fund Balance is decreased (debit). Because the budget can either result in a surplus of available funds or a shortfall that needs to be covered, the journal entry to record the budget will involve either a debit or a credit to Budgetary Fund Balance, as appropriate. This is why a single fixed direction cannot always be correct.