Q3-1 Governmental budgeting and budgetary control are deemed so important by the GASB that it devotes an entire principle to the subject. Why?

Q3-2 Distinguish between the following types of budgets:

(a) capital and current,

(b) tentative and enacted,

(c) general and special,

(d) fixed and flexible, and

(e) executive and legislative.

Q3-3 Budgeting is a continuous process. Explain.

Q3-4 What are budgetary control points? How do they affect budgetary accounting and reporting?

Q3-5 Why are encumbrances not considered expenditures under the modified accrual (GAAP) basis of governmental fund accounting?

Q3-6 Why might a local government not prepare and adopt its General Fund annual operating budget on the modified accrual (GAAP) basis?

Q3-7 Revenue estimates and appropriations enacted are standards against which performance is subsequently measured. What implications can be drawn at year-end if variances from these standards occur? If no variances occur?

Q3-8 In business accounting, a single general ledger accountsuch as Cash, Accounts Receivable, Investments, or Accounts Payabletypically controls the related subsidiary ledger accounts. Explain how in governmental fund accounting the general ledger accounts control.

(a) the Revenues Subsidiary Ledger accounts and

(b) the Expenditures Subsidiary Ledger accounts.

Q3-9 Illustrations 3-2 and 3-3 show Revenues Subsidiary Ledger accounts classified by major revenue source category and Expenditures Subsidiary Ledger accounts classified by function. Could more detailed subsidiary ledger accounts be necessary in practice? Explain.

Q3-10 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?

Q3-11 Explain how the budgetary fund balance account is used. What effect does recording the budget have on the GAAP-based financial statements? How is Budgetary Fund Balance reported in the General Fund Balance Sheet?

Q3-12 An annual budgetary comparison schedule for a governmental fund is shown in Illustration 3-5.

(a) Should this schedule be on the unit's budgetary basis or on the GAAP basis?

(b) Why does the GASB require governments to include both original and revised budget data in a budgetary comparison statement (or schedule)?