Chapter 12, Problem 1Q

Are governments and not-for-profit organizations required to prepare budgets?

To determine

Explain whether government and not-for-profit organization require preparing budgets.

Explanation of Solution

• As per budgetary control principle and GASB budgeting, government units are mandated to prepare annual budget.
• Governments which have legally implemented preparation of budget must make comparison for the General Fund and each major special revenue funds.
• Budgets for other governmental funds, proprietary funds, and fiduciary funds are not mandatory budgets. These budgets are prepared if required. 
• On the other hand, it is not mandatory to prepare budgets for not-for profit organizations. But, while preparing budgets, these organizations follow same budgeting concepts like government units.