**Understanding Budgetary Entries and Their Impact on Estimated Revenues**In budgeting for municipalities, various financial entries are made to reflect the economic status and projections for the fiscal year. Here we explore an example from Shepherd City to understand how budgetary entries impact the city's financial outlook.**Scenario:**Shepherd City's original budget included a credit to the fund balance of $20,000. During the fiscal year, the City recorded an additional entry that debited the budgetary fund balance and credited estimated revenues.**Question:**Which of the following accurately describes what happened?**Options:**1. The estimated revenues decreased, reducing the City's projected surplus for the year. 2. The estimated revenues decreased, improving the City's projected surplus for the year. 3. The estimated revenues increased, reducing the City's projected surplus for the year. 4. The estimated revenues increased, improving the City's projected surplus for the year. **Explanation:**The additional entry made by Shepherd City involves debiting the budgetary fund balance and crediting the estimated revenues. When the estimated revenues are credited in accounting, it signifies an increase in the estimated revenues. 1. If estimated revenues increase, the available resources for the City increase, which generally would lead to an improvement in the projected surplus for the year. Therefore, the correct option is:**◉ The estimated revenues increased, improving the City's projected surplus for the year.**This entry is essential for understanding how specific budgetary actions influence the projected financial outcomes for a municipal body. Effective budget management helps ensure a city can meet its financial obligations and effectively utilize its resources.

An accounting entry has 2 aspects-Debit and Credit.If an item is of credit nature and if we are…

Shepherd City's original budget included a credit to fund balance of $20,000. During the year, the City recorded an additional entry that debited budgetary fund balance and credited estimated revenues. Which of the following accurately describes what happened? The estimated revenues decreased, reducing the City's projected surplus for the year. The estimated revenues decreased, improving the City's projected surplus for the year. The estimated revenues increased, reducing the City's projected surplus for the

Shepherd City's original budget included a credit to fund balance of $20,000. During the year, the City recorded an additional entry that debited budgetary fund balance and credited estimated revenues. Which of the following accurately describes what happened? The estimated revenues decreased, reducing the City's projected surplus for the year. The estimated revenues decreased, improving the City's projected surplus for the year. The estimated revenues increased, reducing the City's projected surplus for the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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