SUBSECTION 2.2.5.4
EQUITY

2.2.5.4.1

General

Effective Date:

Sept. 1, 1998

2.2.5.4.1.a

Fund equity represents the difference between fund assets and fund liabilities. In governmental and fiduciary fund type accounts, fund equity is called fund balance. Fund balance is classified as either reserved or unreserved. Reserved fund balance represents amounts not available for appropriation or expenditure. Unreserved fund balance is either designated to indicate tentative plans for future use or undesignated to indicate the amount available for appropriation. All adjustments to reserved fund balance are offset to unreserved fund balance. (Refer to Section 2.2.5.5.13 for an illustrative entry.)

2.2.5.4.1.b

In proprietary fund type accounts, equity resulting from the accumulation of earnings is called retained earnings and equity provided by contributions from other accounts and capital grants is classified as contributed capital.

2.2.5.4.1.c

Except under specific circumstances, direct entries to fund balance and/or retained earnings are not allowed. Implementation of new accounting standards and correction of material prior period errors (refer to Section 5.1.2.1.3) are two exceptions which require direct entries to fund balance and/or retained earnings.

2.2.5.4.1.d

Refer to Section 7.2.3.2 of this manual for a description of the various equity general ledger codes.