A concerned citizen provides resources and establishes a trust with the local government. What factors should be considered in determining which fund to report the trust activities.
This first factor to consider is the fund's purpose. (1) It can be for the government or its citizenry. (2) It can be for individuals, private organizations, or other governments. Next you need to consider if the fund is expendable or nonexpendable. If it is expendable then there is no difference between earnings and principal in terms of spending, both can be expended for the purpose of the fund. If it is nonexpendable then the principal must be maintained and only the earnings can be expended.
With these two factors you can determine the fund type. (1) If it is to benefit the government or its citizenry and is EXPENDABLE, it is a Special Revenue Fund. (2) If it is for the government or its citizenry and is NONEXPENDABLE, it is a Permanent Fund. (3) If the fund is for individuals, private organizations, or other governments the it is a Private-Purpose Trust Fund. Although these accounts are normally nonexpendable there is no requirement.
This first factor to consider is the fund's purpose. (1) It can be for the government or its citizenry. (2) It can be for individuals, private organizations, or other governments. Next you need to consider if the fund is expendable or nonexpendable. If it is expendable then there is no difference between earnings and principal in terms of spending, both can be expended for the purpose of the fund. If it is nonexpendable then the principal must be maintained and only the earnings can be expended.
ReplyDeleteWith these two factors you can determine the fund type. (1) If it is to benefit the government or its citizenry and is EXPENDABLE, it is a Special Revenue Fund. (2) If it is for the government or its citizenry and is NONEXPENDABLE, it is a Permanent Fund. (3) If the fund is for individuals, private organizations, or other governments the it is a Private-Purpose Trust Fund. Although these accounts are normally nonexpendable there is no requirement.