Question

GASB standards require that fund balances of governmental funds be classified according to whether the fund balance is spendable or nonspendable. Spendable fund balances are further classified as:

a)Restricted
b)Committed
c)Assigned
d)Unassigned

Answer 1

GASB standards require that fund balances of governmental funds be classified as spendable or nonspendable, with further classifications of restricted, committed, assigned, and unassigned fund balances.

Step-by-step explanation:

The GASB (Governmental Accounting Standards Board) standards require that fund balances of governmental funds be classified according to whether the fund balance is spendable or nonspendable. Spendable fund balances are further classified as:

1. Restricted: These are fund balances that have specific legal constraints on how they can be spent. For example, a grant from the federal government may specify that the funds can only be used for a certain program or purpose.
2. Committed: These are fund balances that have been designated for specific purposes by formal action of the government's highest level of decision-making authority. For example, a city council may commit certain funds for the construction of a new community center.
3. Assigned: These are fund balances that have been given an intended purpose by the government's highest level of decision-making authority, but the purpose is less formal than a commitment. For example, a government may assign funds for future infrastructure improvements.
4. Unassigned: These are the remaining fund balances that are not restricted, committed, or assigned. They represent the residual equity in the funds and can be used for any governmental purpose.