Fund Accounting
The Foundation of Governmental Accounting
Governments use fund accounting to segregate resources according to legal restrictions, purposes, and activities. Each fund is a separate accounting entity with its own assets, liabilities, revenues, expenditures, and fund balance.
- Separate accounting records for each fund.
- Resources tracked by purpose.
- Improves accountability.
- Supports legal compliance.
Tip
Think of each fund as a separate mini-entity within the government.
Summary
Fund accounting helps governments demonstrate that public money is spent only for authorized purposes.