Fund Accounting is a general term used to describe the management of financial resources held by a government entity. Fund accounting involves allocating the amount received for the provision of services to the expenditure incurred by the governmental entities concerned. The purpose of fund accounting is to determine the total amount of funds which are available to be spent by the respective entities. Such accounting records the transactions which have taken place between the donor and the recipient of funds and records the date when these transactions took place and whether the funds were spent in accordance with the intent of the donors. Fund Accounting involves various steps and it includes preparation of a statement of fund availability, preparing the statement of change in the fund availability, keeping the books of account, and closing the books of account.
Fund accounting is basically an accounting process for recording the assets whose usage has been limited by the donor, the grantee, governing body, or other people or organizations. It is generally used by government agencies and Non-profit organisations. Fund Accounting helps in establishing the accuracy and validity of the data provided in the accounts.
Fund Accounting involves various steps and it includes preparation of the statement of fund availability, preparing the statement of change in the fund availability, keeping a book of account, and closing the books of account. The fund availability statement lists the assets that have been used up for the supply of services by the government agency concerned, such as the cash on hand and the balance in the bank of the agency. The balance in the bank is the sum of all the receivables and the repayments. The statement of change in the fund availability indicates the change in the number of assets that have been used up since the earlier statement was prepared. Check out this website at http://www.huffingtonpost.com/news/software-development/ for more info about insurance.
The statement of change in the fund availability and the account of the change in the fund availability are usually prepared annually. The account of the change in the fund availability usually comprises all the financial assets and liabilities that have changed since the last statement was prepared. The account of the change in the fund availability is the best way of tracking the changes that have taken place in the financial status of the agency concerned. The account of the change in the fund availability also contains the changes in the assets, liabilities, accounts payable, accounts receivable, and other financial data. These data are collected from various sources such as the reports of auditors, the auditors' reports, tax returns and other official documents of the concerned government agency. Be sure to read more now!
The statements of fund availability and the accounts of change in the fund availability are used by the concerned authorities to identify the funds that are available to be spent by the agency concerned. The accounts are prepared in the form of an expenditure statement, which shows the expenditure and the surplus funds. The surplus funds are then added to the balance in the bank and the expenditure is credited to the account of the fund availability. When the accounts are prepared in this manner they are termed as deficit statements. The expenses are then added to the deficit and when the difference is made the surplus amount is credited to the account of the fund availability and the excess amount is credited to the account of the surplus.
When the accounts are prepared in the manner mentioned above, the balance sheet is prepared. The balance sheet helps the concerned authorities to determine the assets and the liabilities of the organization. Start now!
