What is the purpose of fund accounting?
Fund accounting is used to control the collection and expenditure of financial resources for regulated or restricted purposes (stewardship). Who uses fund accounting? Nonbusiness organizations that usually do not finance their operations through adequate charges to direct beneficiaries of their service use fund accounting. When is fund accounting appropriate? Fund accounting is used when the income determination model is not appropriate because those who contribute revenue do not necessarily benefit proportionally or at all from the services provided by the organization. How does fund accounting work? There are sources of funds (revenue, bond proceeds, transfers in), and there are uses of funds (expenditures and transfers out). What are the two different types of funds? Expendable funds are used when financial resources are designated for a specific use, and proprietary funds are used for commercial (profit-making) activities of nonbusiness organizations. Fund Accounting Terminology As
