Lesson: Beginning and End of Year Journal Entries

In this lesson, Nick Palazzolo, CPA, breaks down the critical 'bookend' journal entries that mark the beginning and end of a fiscal period in governmental accounting. He walks through the process of drafting the initial budget by debiting estimated revenue control and crediting appropriations, explaining the rationale behind this approach. Nick simplifies the confusing aspect of debiting revenue when formulating a budget, clarifying that estimated revenue control represents an anticipation of income, while appropriations denote planned governmental expenditures. He dissects the significance of the budgetary control account, which captures the surplus or deficit of the period. Moreover, Nick meticulously details the reversal of these entries at year's end, emphasizing the consistency in dollar amounts between the opening and closing entries to ensure a clear understanding of this cyclical process.