Which statement about the budget is true?

• A. The Estimated Revenues account is debited.
• B. The Estimated Revenues account is credited.
• C. The Budgetary Fund Balance is debited.
• D. The Budgetary Fund Balance is credited.

Answer: (D)

Budgetary control accounts in governmental funds are used to reflect the adopted budget and its financing sources. When the budget is adopted, resources are estimated and the budgetary entries are set up so that the financing source created by the difference between estimated revenues and appropriations is recorded as a Budgetary Fund Balance. This account normally carries a credit balance, representing the funding available to finance the budgeted expenditures. Therefore, crediting the Budgetary Fund Balance is the correct way to reflect the budget adoption.

Estimated Revenues, by contrast, are handled in the budget entries in a way that supports the anticipated inflows, typically not by debiting them in the sense implied by the option. Debiting the Budgetary Fund Balance would imply reducing the budget’s financing source, which is not how the adopted budget is recorded.