In short
A permanent fund is a governmental fund for resources legally restricted so that only the earnings, not the principal, may be used to support the government's own programs, such as a gift whose income maintains a public cemetery.
Key takeaways
- If the earnings benefit individuals or private organizations, a private-purpose trust fund is used instead.
- It uses the modified accrual basis.
- The principal is reported as nonspendable fund balance.
Where it's tested
FAR: Governmental Accounting — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Governmental funds use which measurement focus and basis of accounting?