Which of the following is NOT a component of budgetary accounting?

The correct choice is that preparing financial reports for external stakeholders is not a component of budgetary accounting. Budgetary accounting primarily focuses on the planning and control of financial resources within an organization, particularly in governmental and not-for-profit settings.

The main components of budgetary accounting include tracking commitments and obligations, which ensures that funds are allocated properly and that future expenditures are anticipated; managing requisitions and encumbrances, which involves overseeing purchases and ensuring that budgetary funds are reserved for future expenses; and tracking expenditures by purpose and time, which helps organizations align their spending with budgetary goals and timelines.

While preparing financial reports for external stakeholders is an important function of overall financial accounting, it falls outside the direct scope of budgetary accounting. Budgetary accounting is mainly concerned with internal processes that help organizations manage their budgets and ensure the responsible use of funds.