Final answer:
Negative fund balances are reported as 'unassigned' fund balance according to GASB guidelines. This classification reflects a deficit in available resources compared to obligations. Proper classification is vital for the representation of financial constraints.
Step-by-step explanation:
Under the Governmental Accounting Standards Board (GASB) guidelines, negative fund balances may only be reported as unassigned fund balance. The 'unassigned' classification is used within the General Fund and indicates that the available resources are less than the obligations, resulting in a deficit situation. It is important for entities to carefully classify and report their fund balances, as they represent constraints on how financial resources can be used.