RULE: Unassigned fund balance represents the amount of current resources carried forward into the following year that will be available for appropriations. Assuming there are no encumbrances at year end and expenditures were less than appropriations, any commitment or assignment of fund balance for encumbrances would be released and unassigned fund balance would increase. Note that the Budgetary Comparison Schedule illustrated for Progressive Township in your text shows that the "Final" budgeted fund balance at the beginning of the year is equal to the "Actual" fund balance at the beginning of the year. The examiners' question effectively asks when the relationships between budgeted and actual results create an actual fund balance greater than expected. When appropriations are greater than expenditures (expenditures are less than appropriations) unassigned fund balance will likely increase. Choice "D" is correct. Appropriations (estimated expenditures) in excess of actual expenditures would increase the unassigned fund balance. Not all of the original budget (appropriations) was spent, and the excess (assumed to be unencumbered by the fact pattern) was returned to fund balance.
Choice "c" is incorrect. Actual revenues less than estimated revenues would indicate that the unassigned fund balance would decrease. There was effectively a revenue shortfall, and it had to come out of fund balance.
Choice "b" is incorrect. The relationship between estimated revenues exceeding actual appropriations is a comparison of budgeted amounts that does not give sufficient information to draw any conclusion with regard to the impact on unassigned fund balance. The "actual" appropriations is a distracter.
Choice "a" is incorrect. Actual expenditures in excess of appropriations would decrease the unassigned fund balance. More money was spent than was anticipated.