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Fund accounting

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What is fund accounting?
How does it compare to proprietary accounting?
Why is it necessary?
What are the major fund types?

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Fund accounting

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Fund Accounting is a method of segregating resources into categories, (i.e. funds) to identify both the source of funds and the use of funds. It is basically A system of accounting used primarily by non-profit or government organizations. For these and other similar organizations, it is more important for them to keep a record of how their money was spent, rather than how it was earned, unlike corporations. Their accounting records take the form of a collection of funds, each fund having a distinct purpose, ranging from operating expenses to funding the various activities of the organization.

Reference: http://www.investorwords.com/6825/fund_accounting.html

Fund accounting is different from proprietary accounting because in the case of fund accounting, accountability is measures instead of profitability. Further, the accounting equation for fund accounting is also different, ie,

The accounting equation is Assets = Restrictions on Assets.

Reference: http://www.answers.com/topic/fund-accounting

Fund Types:

A. Current Funds The Current Fund is a group of funds expendable for operating purposes in support of the institution's mission: expected to be expended in the near term.

1. Restricted- Includes funds available for financing operations, but which ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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