How Governmental Funds Are Used

As citizens, we all know that government takes on projects designed for the public good. These projects range from paying for police and firefighters to completing construction for things like libraries and road improvements. Projects approved by the government are paid for through governmental funds. These funds are established for the sole purpose of the specific spending project. Government fund accounting software is used to record and provide accountability that the resources allocated are used for the stated purposes. Unlike private business, accountability instead of profitability is the focus. There are different types of governmental funds.

Description: C:\Users\Rohimen\Desktop\Accounting-e1510695730851-768x384.jpg


The general fund serves as the primary operating fund for any government entity. It is the home of funds that are yet to be designated to other specific funds. The tax revenue gathered from citizens is deposited here.

Special Revenue

Special Revenue funds are the most common type of fund that governments used. These accounts are established to collect money for specific government projects such as schools and parks. They come with a high level of transparency so that citizens can see how their tax dollars are being used.

Capital Projects

The funds that are designated Capital Projects are for projects that are financed by the public. They are typically large scale building projects. They can be for renovations or new construction, equipment or property, or infrastructure or improving information technology. The common thread among all is that Capital Projects are designed to be a benefit or asset to the public.

Though many people may believe that the government operates in a way that is similar to business, it differs in many ways. Governmental Funds provide a level of accountability that money allocated for projects that serve the common good and that there is a record of how taxpayer dollars are spent. In addition to examples listed here, there are a number of other government funds that are utilized. The biggest distinction about government economics versus private business economics is that, for the government, the betterment of the community and citizenry is the goal not profits.