Budgeting Basics and Beyond

24.2. Funds

Every nonprofit organization contains a fund through which its operations are handled. Among governments and municipalities, this fund is referred to as the general fund. The general fund consists of resources used to conduct general operations. This fund shows the inflow of resources, typically in the form of taxes; licenses; fines and forfeits; governmental assessments; and miscellaneous revenue. The budget will also include cash outflows for such activities as general administration, sanitation, recreation, public safety, and education.

A fund is a fiscal and accounting entity with a self-balancing set of accounts that are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

The following types of governmental funds exist:

• General fund—used to account for all financial resources, except those required to be accounted for in another fund.

• Special revenue fund—used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes. Examples of special revenue funds are those established for the purpose of financing schools, parks, and libraries.

• Special assessment fund—services or capital improvements provided by local governments that are intended primarily to benefit a particular property owner or group of property owners, rather than the general citizenry.

• Capital projects fund—used to account for financial ...