ACC460 Government and NonProfit Accounting WEEK TWO Fund

ACC/460 Government and Non-Profit Accounting

WEEK TWO Fund Accounting

Learning Objectives After Week 2, you should be able to: • Distinguish between the various types of funds used by governments. • Examine the accounting process used for governmental funds, proprietary funds, and fiduciary funds. • Analyze typical operating transactions for governmental, proprietary, and fiduciary activities and prepare appropriate journal entries at both the government-wide and fund levels.

Definition of Fund Types • Governmental Funds • GASB refers to these as all funds other than proprietary or fiduciary. • Proprietary Funds • A business-like or commercial-type fund. • Government generally makes initial contribution but thereafter the fund pays its own way through fees for services provide. • Fiduciary Funds • Any fund held in a fiduciary capacity.

Governmental Funds • General Fund. This fund is used to account for general operations and activities. • Special Revenue Fund. Required to account for the use of revenue earmarked for a particular purpose. • Capital Projects Fund. Used to account for the construction or acquisition of fixed assets. • Debt Service Fund. Used to account for the interest and principal of long-term debts. • Permanent Fund. Account for public infrastructure improvements.

Governmental Funds (Cont. ) • Accounts for core governmental services like police and fire protection, and streets, highways. • Measurement Focus: flow of current financial resources • Revenues must be available to pay liabilities of current period before they can be recognized • Current financial resources include cash, receivables, marketable securities, prepaid items, and supplies inventories • Capital assets such as land, buildings, and equipment • Basis: modified accrual accounting

Proprietary Funds • Internal Service Fund. Used for operations serving other funds or departments within a government on a cost-reimbursement basis. • Enterprise Fund. Used for services provided to the public on a user charge basis, similar to the operation of a commercial enterprise.

Proprietary Funds (Cont. ) • Accounts for public utilities, toll roads and toll bridges, and airports. • Basis of Accounting: Full Accrual • Operated like a “normal for-profit” business • Measurement Focus: Economic Resources • All assets and liabilities are included in the balance sheet • Accounts for expenses (not expenditures) • Fund Equity (Net Position) Net Position = Assets – Liabilities

Fiduciary Funds • Trust Funds and Agency Funds. Accounts for assets held in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or other funds. • Accounting is simple: assets = liabilities. • No revenue and expense to accrue • No fund equity account • Basis of Accounting: Full Accrual • Measurement Focus: Economic Resources

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