Certified Government Financial Manager (CGFM) 2026 – 400 Free Practice Questions to Pass the Exam

Budgetary accounting is designed specifically to monitor commitments, obligations, and expenditures related to a budget. It plays a crucial role in government and nonprofit organizations, where adherence to budgetary constraints is essential for maintaining financial integrity and accountability. This type of accounting provides a framework for ensuring that spending aligns with approved budget levels, helping decision-makers track financial performance against budgetary expectations and reduce the risk of overspending.

In contrast, financial accounting focuses on generating financial statements that reflect the overall financial position of an organization, including its revenues and assets, but it does not track commitments and obligations in a way that ties directly back to the budget. Tax accounting emphasizes compliance with tax regulations and preparation of tax returns, while managerial accounting is more about analyzing operational data to support decision-making processes rather than tracking compliance with budgetary guidelines.

Thus, the emphasis on commitments and obligations that budgetary accounting provides makes it the correct choice for tracking these financial elements within an organization.