Governmental Funds
Lesson:
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.
You've been asked to look over the debt service fund records for the local government.
What kind of fund is the debt service fund, and what is it used for?
Answer:
- The debt service fund is a basic governmental fund.
It holds the money to pay for debt principal and interest. Funding typically comes from the general fund.