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 internal service fund records for the local government.
What kind of fund is the internal service fund, and what is it used for?
Answer:
- The internal service fund is a proprietary fund.
It contains reimbursed service and product transactions between governmental units.