Q1

Answers

1. false (Line-item / traditional Budgeting)

2. false ( accrual basis )
3. true

Q2

What are the budgeting principles ?

Answer

1-Transparency and accountability

The inclusion of transparency and accountability, requiring that

decisions,results and the costs, be accessible, clear and
communicated to the wide community.

Transparency requires that the decision makers have all relevant

information available when they make decisions.

Accountability refers to the responsibility of someones actions to

someone else.

2- Annual budget principle

Attempts of parliament to exercise control over the activities of

central gov.

Expenditure have to be approved for each financial year by

parliament.

3- Comprehensive budget principle

Including all expenditures and resources of the state in S.B.

Enables the state to utilize all resources available during the

budgetary year in the best use.

4- Unity of budget principle

Budgets of all gov. units are aggregated in one budget (S.B.) .

 This principle can be observed through the aggregation process of
the budget of the gov. units.

So, S.B. must include all revenues & expenditures for all gov. units.

5- Balanced budget principle

It refers to the equality of estimated expenditures and estimated

resources.

* In case of inequality (where deficit exist) the gov. has to follow one or
both of these alternatives:

- Reduce the state expenditures or delay implementation of certain

projects.

- Increase resources ( as taxes).

* In case of inequality (where surplus exist) the gov. has to follow one of
these alternatives:

-increase funds directed to implementation of projects.

-reduce loans by payment of loan installments before due date.

-invest surplus in other ways.

Q3 Types of budgets and summarize the differences between

them

Answer

1- Line-item / traditional Budgeting

(control orientation)

All governments have some form of line-item budgets

Ex. :

Gov. units Budget, xx/xx

Resources :

Taxes

Grants

.
Total resources

Uses:

Compensation for employees

Purchase of goods and service

Total uses

Balance (surplus or deficit)

All governments have some form of line-item budgets

It covers inputs only, this means that Gov. Acc. Deals only with what
is used to make the unit continues.

Egyptian gov. still depends on this type of budgeting to formulate

the S.B.

It is allocation of resources according to cost of each object of

expenditure.

2-Functional/activity/performance/ programs budgeting

Management orientation)

Ex. :

Police authority annual budgets, xx/xx

Crime control and detection

Traffic control

Administration

..

total

It covers more administrative activities than had the traditional

budget.

Outputs as well as inputs were considered

3- Planning / programming Budgeting

(economic orientation)

The program has 3 basic elements and 11 subdivisions.

Ex. :

Planning and development program for gov. unit

1- land use planning

a) Development plan

b) development control

2- Environmental improvements

a) Environmental improvement areas

b) Care of trees

3- commercial redevelopment

a) Other industrial locations

b) Shops and offices

Planning : is a choice of optional goals of an organization and the

choice of the methods to be used to achieve those goals over a
specific time period.

Programming : is an implementation of particular projects designed

to accomplish an organizations goals in most effective and efficient
way.

Budgeting : is the cost estimate attached to each goal, plan,

program, and project.

4- management by objectives

Started in private sector.

Is an attempt to set objectives, track progress of the appropriate

program, and evaluate its results.

5- Zero- based Budgeting (ZBB)

Is a cost-benefit approach whereby it is assumed that the cost

allowance for an item is zero, and will remain so until the manager
justifies the existence of the cost item and the benefits the
expenditure brings.
 It is appropriate for both non-profit organizations and governmental
units.

Q4

Answer

False

No allocation of acquisition cost of a fixed asset to exp. Account of a

particular period that benefit from the use of assets.

Because :

1- the funds will be provided to gov. units at the end of asset life
from S.B.

2- these gov. units introduce goods and services to the public either
free or at low price (so, preparing income statement to calculate net
income does not make sense in gov. units).

Q5

False

Regarding S.B., the process of setting up either provisions or reserves

does not make sense because the gov. will finance the funds needed to
face the increase in liabilities or decrease in assets which the provisions
were formulated to face as with reserves.