Government Accounting Ch 1-3

Identify and describe the five environmental differences between governments and for-profit business enterprises

Define government

Fund Accounting

Governmental Funds

Proprietary funds

Fiduciary Funds

fund

represents a part of activities in an organization, separately reports the resources and activities of a part of a government and is segregated because of the existence of restriction or limitations on the use of some resources

Governmental Type

Used for activities that are largely unique to the government environment and do not fall into either the proprietary or fiduciary categories

Proprietary type

business type actvitites

fiduciary type

•Acting as an agent or trustee of moneys that generally belong to other parties (NOT OUR MONEY).

permanent funds

account for and report resources that are restricted to the extent that only earning, and not principal, may be used for purposes that support the reporting government’s programs.

capital project funds

account for and report financial resources that are restricted, committed or assigned to expenditure for capital outlays. As such, it accounts for the purchase or construction of major capital improvements, except those purchased or constructed by a proprietary (and less commonly, fiduciary) fund.

debt service fund

account for and report financial resources that are restricted, committed or assigned to expenditure for principal and interest, other than interest or principal on proprietary or fiduciary activities.

special revenue funds

account for and report the proceeds of specific revenue sources that are restricted or committed (not merely assigned) to expenditure for specified purpose other than debt service or capital projects. These include activities funded by federal or state grants or by taxes specifically restricted to certain activities.

general fund

accounts for most of the basic services provided by the government. Technically, it accounts for and reports all financial resources not accounted for and reported in another fund.

enterprise fund

An enterprise fund is a fund established for the purpose of measuring net income for a governmental department providing goods or services primarily to outside consumers, in which it is the intent of the government that the department operate on a cost-recovery or profitable basis.

internal service fund

An internal service fund is a fund established for the purpose of measuring net income for a governmental department providing services primarily to other departments or agencies within the government, in which it is the intent of the government that the department operate on a cost reimbursement basis.

investment trust fund

- Accounts for the external portion of investment pools governed by a trust agreement in which the sponsoring government acts as trustee.

pension fund

Pension funds are used to account for assets provided to pension trusts. The earnings of these assets are used to pay the pensions of public (government) employees.

private-purpose trust fund

- report all other trust arrangements under which principal and income benefit individuals, private organizations, or other governments.

custodial funds

account for all other fiduciary activities, including activities where a trust agreement is not in effect.