What is the accounting entry for the City Council's approval of the fiscal year budget for the General Fund?

The approval of the fiscal year budget for the General Fund involves recognizing the estimated revenues that the city expects to collect and the appropriations that the city council has approved for expenditure. When the budget is formally adopted, the entries reflect both the anticipated revenues and the planned expenditures.

Debiting Estimated Revenues indicates that the city expects to receive a specific amount of revenue during the fiscal year. This entry sets the stage for counting incoming financial resources. On the other hand, crediting Appropriations reflects that the city council has approved a certain level of expenditures, assigning funds for specific programs and services within the city. This establishes the limit on how much can be spent during the fiscal year.

The interaction of these entries provides a balanced budget framework where the expected revenues align with the approved appropriations. This approach is essential in government accounting, as it ensures that the financial resources are effectively planned and that expenditures do not exceed revenue availability during the fiscal year.