Similar to a business institution the government is also established in a setup accounts for varied spending. A government fund is a group segmentation that is used in accounting activities that primarily involve taxation activities met by the federal government. In business, there is the proprietary fund, which is used in the business activities that are done by the government.
General fund
These are funds that are mainly used by the government and its entities. The fund is used in the recording of the inflows and outflows which are not linked or connected to the special-purpose funds. The types and forms of activities being financed for using the general fund contribute to the administrative and operational activities of a given government entity. The reason behind is because the overall bulk resources flow through the stream of a general fund, it is essential that they maintain control over their spending from the source. For instance in a government entity is the buying of the general supplies and meeting of operational expenditures.
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Permanent funds
In the United States, is one of the government types that have been established by the GAAP; It is categorized under the restricted true endowment fund. It is used for the purpose of generating and disbursing money to those that are entitled such as the governments and non-profit organizations in receiving payments through qualifications and agreements, for instance in Alaska the citizens there or some residents are qualified or satisfy the rules of getting payments from a permanent fund such as the State oil revenues. The name has been attributed to the very purpose of the fund.
Special Revenue Fund
These are the funds that are used in a governmental entity to record the profits coming in from other revenue generating sources from where the funds are restricted. An excellent example of the special revenue fund would be the funds that are employed for funding parks, libraries, schools and other wastewater supervisions ( Copley & Engstrom, 2015) . Through the employment of the special revenue, it now becomes more comfortable for the tracking cash coming and going out that are linked to the special-purpose activities. A specific city might think of establishing a special revenue fund that will be used to pay costs connected to stormwater supervisions.
Projects funds
These are the funds that are mainly used in governmental accounting to track the financial resources that are primarily employed in acquiring and constructing significant capital assets. Once the specified asset has been fully established and complete, the funding is now terminated. For instance, an infrastructure project is such as a railway, the roads and building a dam. The projects also include some assets, for example, the subways, pipeline, and refineries.
Debt Service funds
It is primarily a reserve for cash that is mostly employed in the paying of interests and principals for specific types of debts. Its existence is purposed to reduce the risk of a debt security for the investors. The reduction of debt security makes it attractive to the investors and at the same time reduces interest rates required for the selling of the offering. Categorically, it ties up a specified portion of the amount that the debt issuer gets from the debt contribution so that the amount cannot be directed into other more useful investments.
Reference
Copley, P. A., & Engstrom, J. H. (2015). Essentials of Accounting for Governmental and Not-for-profit Organizations . McGraw-Hill Education.
