This essay has been submitted by a student. This is not an example of the work written by professional essay writers.
Uncategorized

Permanent Funds 

This essay is written by:

Louis PHD Verified writer

Finished papers: 5822

4.75

Proficient in:

Psychology, English, Economics, Sociology, Management, and Nursing

You can get writing help to write an essay on these topics
100% plagiarism-free

Hire This Writer

Permanent Funds 

In my opinion will support the first group, that is the group with the view that wants creation of a permanent fund for the principle investment and use special revenue fund to account for the return of the investment as well as their use. By setting up a permanent fund, the sum of the donation as capital will be preserved and the interests income that the money will generate can be use to provide payments necessary to fund the ongoing maintenance. Permanent funds were established by GAAP for government and non-governmental organizations to utilize thus the choosing of the fund to record the donations will be within the confines of the law.

The use of special revenue fund to account for the earnings of the investments provides extra level of transparency and accountability to the tax payers that donate the funds and ensuring that the earnings will go to the intended purpose, which is maintaining the ongoing work. This is because; the earnings will be restricted in usage.

Recording Transactions of Permanent Fund

Long term bonds, Intergovernmental transfers, and public donations to construct and maintain a building.

The city should set up permanent fund for the principal of the investment and use a special revenue account for earnings of the investments.

Amounts received from funding sources for the new hall should be recorded in the fund account created. The corresponding entry is the bank account. The account should be designated or restricted for the specific investment. This will help track the funds mobilized for this project.

On the other hand, there should be a special revenue account created to recognize the revenue earned from principal funds accumulated for the construction and maintenance.

The funds accumulated from public donations may not be utilized in the current period and thus may be invested in commercial banks as fixed deposits to earn interest. The income earned should be recorded in the special revenue account. Also, the yields on the government bonds inform of interest should be recorded in the account as income.

The setting up of the two accounts above is key in enhancing internal controls over this project. It helps in keeping track of the funds. For instance, performing reconciliation and agreeing the funds to cash and bank equivalents becomes possible. The revenue generated from investment of the principal amount becomes traceable in the special revenue account ledger.

The creation of the two accounts makes it easy for the funds to be re-invested continually over the period of the project construction and use.

 

 

  Remember! This is just a sample.

Save time and get your custom paper from our expert writers

 Get started in just 3 minutes
 Sit back relax and leave the writing to us
 Sources and citations are provided
 100% Plagiarism free
error: Content is protected !!
×
Hi, my name is Jenn 👋

In case you can’t find a sample example, our professional writers are ready to help you with writing your own paper. All you need to do is fill out a short form and submit an order

Check Out the Form
Need Help?
Dont be shy to ask