Question

Describe the differences between the various governmental fund types

Answer 1

THE DIFFERENT TYPES OF GOVERNMENTAL FUNDS ARE THE FOLLOWINGS:-

1. GENERAL FUND

2. SPECIAL REVENUE FUNDS

3. DEBT SERVICE FUND

4. CAPITAL PROJECTS FUND

5. PERMANENT FUND

LETS NOW DISCUSS EACH TYPE

1.GENERAL FUND

THE MAIN OPERATING FUND OF THE GOVERNMENT IS KNOWN AS THE GENERAL FUND.ANY RESOURCES THAT ARE NOT ASSOCIATED WITH ANY SPECIAL FUNDS ARE RECORDED IN THIS FUND.IT INCLUDES THE MAIN ADMINISTRATIVE AND OPERATIONAL JOBS OF THE GOVERNMENT.

2.SPECIAL REVENUE FUNDS

THIS FUND IS USED TO RECORD ANY REVENUE FROM SOURCES LIKE FUNDING OF LIBRARIES,SCHOOLS,ETC.IN OTHER WORDS USE OF THESE FUNDS IS RESTRICTED FOR SOME SPECIFIC PURPOSES ONLY.

3. DEBT SERVICE FUNDS

AS THE NAME SUGGESTS THIS FUND IS USED TO PAY BACK LONG TERM DEBTS ISSUED BY THE GOVERNMENT.IT IS TO BE NOTED THAT BOTH THE PRINCIPAL AND THE INTEREST AMOUNTS ARE PAID THROUGH THIS FUND.

4. CAPITAL PROJECTS FUND

INVESTMENT FOR CAPITAL PROJECTS LIKE BUILDING CONSTRUCTION ARE MADE THROUGH THIS FUND.AS LONG AS THE CONSTRUCTION IS IN PROCESS THE FUND REMAINS.WHEN THE ASSET IS COMPLETED THE FUND IS ALSO BEING TERMINATED.

5. PERMANENT FUND

IT IS USED TO DISTRIBUTE CERTAIN AMOUNTS OF MONEY AS DIVIDEND OR INTEREST PAID BY THE GOVERNMENT.IT CAN ALSO BE USED FOR SOCIAL WELFARE PROGRAMS LIKE FUNDING NGOs,ETC.