Government funds play an essential role in ensuring that the resources that government receives are sufficient. The government is accountable for its expenses. There are three types of government funds, and each of them is used for a particular purpose. (Carmichael & Rosenfield, 2003). The government has many operations, which must receive special funds to meet their budgetary allocations. The types of government funds are as follows: governmental funds, fiduciary funds and proprietary funds.
Governmental funds are those that the government uses to provide citizens with various services. This type is divided into five categories, each one of them dealing with specific needs. For instance, capital project funds allow the government to purchase major facilities, while debt service funds enable the repayment of long-term debt (Fischer, Cheng, & Taylor, 2008).
Fiduciary funds are used to maintain the operation of governmental organizations, such as investment trust companies, agency funds and pension trusts. The government unit serves as trustee in this operation.
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Proprietary funds are another category of government funds that are used for controlling the operation of government enterprises and services provided by these enterprises. (Ruppel, 2011).
In summary, government funds fall into three categories: governmental funds, fiduciary funds and proprietary funds. The government uses governmental funds to provide different services for the citizens. Expenditure of fiduciary funds aims at funding organizations such as pension funds, where the government acts as an agent. Proprietary funds finance ongoing activities similar to businesses in the private sector.