The principles of All-Hazards Risk Management

The Budget for the library 

A budget is an outline of an organization’s revenue and expenditure for a financial period. It is simply a plan on how the firm intends to receive funds and how the funds will be spent in a particular trading period. The budget journal entries for the library are shown below    ( Jeong, 2017). 

Budget approved at the beginning of the financial period 

The General Funds Account 

This refers to a primary fund issued to a beneficiary used by a government entity. The fund is used to keep a record of all the cash inflows and outflows that are not in any case related to the special purpose funds. The fund is used to pay for a government entity’s administrative and operational expenses (Grizzle, 2010) . The journal entries for the city’s general fund issuance to the construction of the library are shown below 

The End of the Financial Period 

Issuance of Bonds 

A bond is a fixed interest debt instrument where the issuer (debtor) is obliged to pay the recipient (creditor) an agreed upon amount of coupons on a periodical basis and later pays the principal amount at the maturity date of the bond. They can be issued at a discount (value below the face value) or at a premium value higher than the face value (Ranosz, 2016) . The journal entries for the city’s bond issuance at a premium are shown below. 

Bond issued at a premium at the beginning of the financial period 

Identifying all the funds required for the above entries 

The funds received from the issuance of the bond, which is the face value and the premium in which the bond was issued. 

The amount received from the general fund from the city’s authorities 

The issuance of a bond that is different from the face value is usually done in response to the coupon rates in the bond market. The bond issuer will for instance sell the bond before maturity at a premium (which is a value that is higher than the face value if the coupon rates have fallen in the bond market. 

Both funds are used to service the entity’s expenditure in one way or another. While the general fund is used to finance the operational and administrative expenditures, the debt service funds are used to service the debts owed to the creditors by entity in terms of the principal amount and the interest payments. The control of the two funds is based on the strict adherence to the budgetary allocations in a way that the funds meant for a particular purpose is directed effectively so as to keep the firm in operation. 

The difference would occur in this situation because an entity such as the government only has the general funds to cater for its administrative and operational expenses of the firm and don not have any other source of revenue to take care of these expenses. The debt service funds on the other hand are meant to service the entity’s debt instruments such as the long and short term loans of the entity. The entity would in most cases be free to source funds from other activities for the purpose of ensuring the entity’s credit position is not negatively affected by lack of funds as is the case in most entities. 

References 

Grizzle, C. (2010). The Impact of Budget Stabilization Funds on State General Obligation Bond Ratings.  Public Budgeting & Finance ,  30 (2), 95-111. doi: 10.1111/j.1540-5850.2010.00958.x 

Jeong, J. S. ( 2017 ). Influence of National Assembly Budget Office Establishment on National Assembly Budget Deliberation: Focusing on Revision Rate of Budget Bill by the National Assembly.  Journal Of Budget And Policy ,  6 (1), 40-67. doi: 10.35525/nabo.2017.6.1.002 

Ranosz, R. (2016). Bonds convertible to raw materials in the context of bonds convertible to shares and ordinary bonds.  E3S Web Of Conferences ,  10 , 00080. doi: 10.1051/e3sconf/20161000080