There is a lot to learn about fund accounting. However, for those working in government agencies or for non-profits, there is help to be found by hiring Sage Intacct fund accountingservices found at www.ftmllc.com. More information about the variety of services they offer can be found on their website. Below is some information about the basics of what fund accounting entails.
Fund accounting is a way that organizations and businesses can separate their money or other resources into different categories. These categories can be set up in a way that only certain people can access the funds and there can be restrictions put on each category. Each category, or fund, is its own accounting entity and maintained separately. Non-profits and other organizations will often receive money with guidelines on how that money can be used. Fund accounting is used for this purpose.
Modified Accrual Accounting
Another detail about fund accounting is that is uses a model of modified accrual accounting. This is the process of recording revenue when it becomes available instead of when it is earned. This type of accounting will treat the acquiring of long-term assets such as expenses and some long-term debts like income. The balance sheet for the fund accounting style will just show capital, not long-term liabilities or assets.
Different Government Funds
Accounting for government funds falls into three basic groups. The first group is an account that is set up for the use, acquisition and balancing of the expendable types of financial resources and liabilities. The second group deals with proprietary funds and are used for activities on a private-sector area. The third group is one that is for fiduciary funds and will help account for assets which the government holds in a trustee capacity.
While it is more common to find fund accounting being used in non-profit organizations and governments, there are other versions of fund accounting that may be useful in other for-profit businesses. As an example, a retail business may want to use fund accounting as a way to separate the accounting of different store locations they have.