GOVERNMENTAL FUNDS
The governmental fund category
includes the General Fund, Special Revenue Funds, Capital Projects Funds,
and Debt Service Funds
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The general fund is used
to account for all unrestricted resources except those required to be accounted
for in another fund. A governmental unit has only one general fund.
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Special revenue funds are
used to account for the proceeds of specific revenue sources (other than
expendable trusts or for major capital projects or debt service) that are
restricted by law or administrative action to expenditures for specified
purposes.
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Capital projects funds are
used to account for financial resources segregated for acquisition or construction
of major capital facilities (except those financed by trust and proprietary
funds).
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Debt service funds are used
to account for the accumulation of the resources required for the payment
of general long-term debt principal and interest as well as payment of
that principal and interest.
Modified accrual accounting procedures
are applicable.
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Measurement focus is on source and
use of resources.
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Revenues are recognized in the accounting
periods in which they become available and measurable.
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Expenditures are recognized in the
accounting periods in which the fund liability is incurred, if measurable.
(Exception: Unmatured interest on general long-term debt is recognized
when due.)
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Governmental fund revenues are classified
by fund and source.
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Governmental fund expenditures are
classified by fund, function (or program), organization unit, activity,
character, and principal classes of objects. Financial reports must include
at least fund and function or program classifications.
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Depreciation expense on general
fixed assets should not be recorded in the accounts of governmental funds
(although accumulated depreciation may be recorded in the general fixed
assets account group). Expenditures, not expenses, are recorded in governmental
funds. The acquisition of general fixed assets is a use of fund resources
(an expenditure).
THE GENERAL FUND AND
SPECIAL REVENUE FUNDS
Modified accrual accounting procedures
are required.
Approved budgets must be integrated
into the accounting systems.
Required financial statements
include:
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Statement of revenues, expenditures,
and changes in fund balance
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Statement of revenues, expenditures,
and changes in fund balance - budget and actual (On the budgetary basis
of accounting)
Encumbrance accounting records
commitments made for goods on order and for unperformed contracts. When
items are ordered, entries are made to encumbrance and reserve for encumbrance
accounts for the estimated amount of the future liabilities. When the items
are received, the actual liabilities are recorded and the encumbrance and
reserve for encumbrance entries are reversed and thus eliminated.
Fund balance of a governmental
fund is equal to the assets less the liabilities of the fund.
Fund balance of a governmental
fund may be segregated into reserved fund balance and unreserved fund balance.