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Governmental Funds

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There are three basic categories of governmental funds:

  • Basic Governmental Funds - Used for basic governmental operations.
  • Proprietary Funds - Used for government services that are run like a business and that charge a fee to customers.
  • Fiduciary Funds - Financials that are managed by the government but belong to another party.

Each type has subtypes. Understanding the purpose of each will prove helpful when working with government financials.

Remember that basic governmental funds use the modified accrual basis of accounting, not the full accrual.

Question You've been asked to look over the custodial fund records for the local government.
What kind of fund is the custodial fund, and what is it used for?
Answer