What is fund balance?Fund based financial statements are designed to show restrictions on the planned use of resources or to measure the revenues and expenditures arising from certain activities within a governmental not-for-profit organization. Financial transactions and adjustments are recorded in these funds. Each fund is a self-balancing set of accounts used to record data generated by an identifiable government function.
Governmental not for profit organizations acquire revenues from private donations, endowments, and grants. These funds can be restricted by the donor. Governmental not-for-profit organizations set up different fund accounts to show the balance of the account and to show any transactions using the monies available.
A fund is an accounting entity with a self-balancing set of accounts. These accounts are set up for recording assets, liabilities, fund balance, and changes to the fund balance. There are several major funds that are set up to account for the transactions in each fund.
The main governmental fund is the general fund, this account is for activities of a government that are carried out primarily to provide services to citizens and that are primarily financed through taxes. An example of this would be the public safety departments. Police and fire departments provide the service to protect its citizens and the funding comes through the property taxes.
Proprietary funds are to account for government's ongoing organizations and activities that are similar to those operated by for-profit organizations. An example of this would be an Enterprise fund. Any government operation that is financed in part by the outside is considered to be an enterprise. For example, if the city has a public swimming pool and there is a fee to utilize the facility it is generating revenue with the help from the public.
Fiduciary funds account for the assets that are held in...