Classify fund balance by identifying external restrictions, formal commitments, assignments, and unassigned residuals.
The reserve story A healthy year-end balance hides different levels of spending constraint. Constraint source sequence Move from most constrained to least: nonspendable, restricted, committed, assigned, unassigned. Classify by who imposed the constraint and how formal it is, not by the desired reserve message. External constraint Step 1 $800,000 is limited by state statute. What should happen first? Formal action Step 2 Council approved the radio project after year-end. What is the key classification question? Residual Step 3 After restrictions and valid commitments, remaining resources are available under general fund policy. How do you close the schedule? Fund balance is…
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