General Fund

A general fund is a primary fund used by a government entity. General fund refers to revenues accruing to the
state from taxes, fees, interest earnings, and other sources which can be used for the general operation of the
Government. General fund revenues are not specifically required in the constitution to support particular
programs or agencies.
The General Fund of the Government consists of assets and liabilities used to finance the daily operations of
the Government as a whole. It also includes accounts used in the management of the budget of the
Government.
Most departmental operating activities, such as those of police and fire, public works, parks and recreation,
culture, education, and social services, as well as general government support services, such as the city
manager’s office, finance, personnel, and data processing, are typically accounted for in the General Fund.

Classification of Revenues
The total Revenues = (NBR+ Non – NBR + Non-tax)

Tax Revenues (NBR Revenue)

Tax Revenues are also known as NBR Revenue. The National Board of Revenue (NBR) is the top authority
for tax administration in Bangladesh. The principal job of NBR is to collect tax revenues like Value Added
Tax, Customs Duty, Excise Duty, and Income Tax ) .
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental
organization in order to fund government spending and various public expenditures.
 Income taxes are imposed on the income earned by a person or firm.
 Property taxes are imposed on assets.
 Sales taxes are imposed on the value of goods sold. (Sales tax is collected by the retailer when the final
sale in the supply chain is reached.)
 Excise taxes are imposed on specific goods or services like fuel, tobacco, and alcohol. (Excise taxes
is a taxes placed on items made inside the borders of a state).
 Customs duties is a taxes imposed on imports and exports of goods. (Customs duties are imposed on
goods imported from other countries or foreign territories).
 Value-Added-Tax (VAT), A value-added tax (VAT) is collected on a product at every stage of its
production during which value is added to it, from its initial production to the point of sale. (VAT is
collected and paid by all sellers and buyers in each stage of the supply chain- Suppliers, manufacturers,
distributors, retailers, and end consumers)
 Supplementary duty: Imposable on luxurious goods, non-essential goods, socially not encouraging
goods, etc. Assessable value + import duty is the base value for the imposition of SD.

Non-NBR Revenue:
1. Narcotics and Liquor Duty
 2. Taxes on vehicle#(ministry of communication )
3. Land Revenue
4. Stamp Duty (Non-judicial, ministry of law and parliament affairs

Non-tax Revenue:
Non-tax revenue refers to the revenue received by the government administration, public enterprises not by
NBR. These sources are different from taxes

Special Assessments and Special Levy:

Special assessments more typically are used for the extraordinary expense of a project that benefits the
community. For example, a town might levy a special assessment tax to build a public recreation center
or a park.
A tax levied by a local government on private property to pay the cost of local public improvements,
such as sidewalk construction or sewage disposal, that are of general benefit to the property taxed.
 Special Levy is a charge levied on those commodities, whose consumption is harmful to
human health.
 The objective behind charging a special levy is to discourage the consumption of harmful
commodities.
  Special levy is taken from consumers of particular commodities.
 Special levy is paid for using commodities like wine, opium, and other intoxicants, etc.

Licenses and Permits as Govt. Revenues:

Licensing revenue is income earned by Govt. agencies for allowing it’s copyrighted or patented material to be
used by another entity. Licenses and permits may relate to the privilege of carrying on business for a stipulated
period, the right to do a certain thing that may affect the public welfare, or the right to use certain public
property.
 Trade license;
 Driving license;
 Vehicle license;
 Amusement Licenses;
 Occupational License etc.

Intergovernmental Revenue:
Intergovernmental Revenues are revenues received from other governmental sources in the form of grants,
shared revenues, and payments in lieu of taxes. Governmental funds should recognize grants and other
financial assistance as revenues in the period in which all me restric ons and eligibility requirements (such as
a matching requirement) imposed by the grantor government have been met.

 Grants are contributions or gifts of cash or other assets from another governmental unit to be used or
expended for a specified purpose.
 Shared revenues are revenues levied by one government unit but shared on a predetermined basis
among other units of government. For example, provinces or states may share revenue with local
governments, or national governments may share revenue with provinces or states.
 A payment in lieu of taxes is a payment made to compensate a government for some or all of
the property tax revenue lost due to tax-exempt ownership or use of the real property.

Revenue and Estimated revenue

Government Revenues, in the sense in which it is customarily used in governmental budgeting, includes all
financial resource inflows—all amounts that increase the net assets of a fund. Examples include interfund transfers
and debt issue proceeds, as well as taxes, licenses and permit fees, fines, forfeits, and other revenue sources

Estimated revenue
Estimated revenue means the amount of revenue estimated to be received from all sources during the budget
year in each fund for which a budget is being prepared. This calculation can be important for a number of
financial activities including estimating taxes due, budgeting, and issuing statements to shareholders and
interested members of the public. There are a number of approaches to developing estimates.
This is used in accrual-basis accounting techniques. Sources for information in a revenue estimate can
include data from prior financial periods, analysis of the market, and projections based on current activities.

Apportion and Expenditure:

An appropriation is a legal authorization to expend cash or other financial resources for goods, services, and
facilities to be used for specified purposes, in amounts not to exceed those authorized for each purpose.
Penal es are imposed by law on an administrator

 If they expends more than appropriated or

 They make expenditures for any purpose not covered by an appropria on or
 a er the authority to do so has expired.

A purchase order will be issued only when a sufficient appropria on.

When liabilities authorized by an appropriation have been incurred, the appropriation is said to be expended.
Thus, budgeted appropriations are sometimes called estimated expenditures. Expenditures, then, are expended
appropriations. According to GASB standards, expenditures should be classified by (1) fund, (2) function or
program, (3) organization unit, (4) activity, (5) character, and (6) object.

Expenditure and Encumbrance :

When liabilities authorized by an appropriation have been incurred, the appropriation is said to be
expended. Thus, budgeted appropriations are
sometimes called estimated expenditures.
Expenditures, then, are expended appropriations.
According to GASB standards, expenditures should
be classified by (1) fund, (2) function or program,
(3) organization unit, (4) activity, (5) character, and
(6) object.
When a purchase order or contract
has been issued, it is important to
record the fact that the appropria on
has been encumbered in the amount
of the purchase order or contract. The
word encumbered is used, rather than
the word expended, because the
amount is only an es mate of the
liability that will be incurred when the
purchase order is filled or the contract
executed.

Encumbrances can therefore be defined as the estimated value of goods or services for which
purchase orders, contracts, or other commitments have been signed, but that have not yet been
received.
An encumbrance is not an expenditure of money. An encumbrance is a commitment against a fund
appropriation. Money that has been encumbered cannot be used for any other purpose than intended.
Processes of encumbrance for recording are as follows with example:

Steps in Encumbrance Accounting Process

Step1: Pre-encumbrance (Commitment)
The first step of encumbrance accoun ng is to iden fy the organiza on's expenses that you want to
encumber. During this step, think about goods and services that your organiza on is likely to
purchase in the future. However, at this stage, there is no legal obliga on to make a payment.
Step 2: Create Encumbrance (Obligation) Once the vendor approves the transaction, the commitment
converts into a legal obligation. When these goods/services are then delivered, two entries are processed:
i. First, the encumbrance is reversed for the amount it was recorded for in the first entry:
ii. Then the purchase is recorded in the normal way:

Step 3: Expenditure (Realization)/Making payment

In this step, payments are made with the funds its encumbrances reserve.

Description Debit Credit

Voucher Payable ###

Cash/ Bank ###

Step 4: At year-end, the balances in the encumbrances and budgetary fund balance assigned for encumbrances
accounts are closed as part of closing the budgetary accounts:
 Description Debit Credit

Budgetary fund balance assigned for encumbrances ###

Encumbrances ###

Classification of govt. expenditures /appropriations

 Classification by fund: i. General Fund; iii. Special Revenue Fund; iii. Debt Services Fund; iv.
Capital Project Fund; v. Permanent Funds
 Classification by functions or program: Function group-related activities that are aimed at
accomplishing a major service or regulatory responsibility. Programs group ac vi es, opera ons,
or organiza onal units that are directed to the a ainment of specific purposes or objec ves.
Function Programs

 General government;  Economic Development

 public safety;  Infrastructure Efficiency and
 highways and streets;  Responsiveness to Ci zens
 health and welfare;  Public Safety
 culture and welfare.  Health Care

 Sustainable City

 Classification by organization unit: Classification by organization unit is considered

essential to management control, assuming the organizational structure of a given
government provides a clear line of responsibility and authority.
 Police Dept.;
 Fire Dept.; Public Works Dept.;
 Personnel dept

 Classification by activity: An activity is a specific and distinguishable line of work

performed by an organization unit. Solid waste collection- residential; Solid waste collection-
commercial; Solid waste disposal- landfill; Solid waste disposal- incineration.
 Classification by character: Classification by character, as defined by the GASB, is based
on the fiscal period that benefits from a particular expenditure. Current expenditures; Capital
outlays; Debt services.
 Classification by object: The object of an expenditure is the thing for which the expenditure
was made. Personal services; Supplies; Capital outlays; Debt service.