Governmental Funds

Lesson

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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 special revenue fund records for the local government.

What kind of fund is the special revenue fund, and what is it used for?

Answer

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👉 Answer:

The special revenue fund is a basic governmental fund.

It holds taxes that must be spent for a specific purpose.