Fund Controls Fund-Balancing Entries

There are two levels of debit and credit balancing in fund accounting. There is the balancing required by double entry accounting: the total debits in the entire GL must equal the total credits. This is required regardless of whether fund or corporate accounting is used. The distribution codes for these entries come from varying sources, depending on the type of financial event.

The second level of balancing is specific to fund accounting. Within each fund-not just across the GL-the total debits must equal the total credits. The original distribution code from the financial event has a fund specified. For example, a bill would cause a debit to a fund's A/R distribution code, and included in that A/R distribution code is the fund. It is the definition of the fund that specifies whether fund-balancing entries are required and provides the distribution codes for these entries.

For a departmental fund, the fund-balancing debit and credit would be specified. When a debit is applied to a departmental fund's GL account, an additional account (typically the general fund's liability to the departmental fund) is debited and an account (typically the departmental fund's EPC) is credited. When a credit is applied to a departmental fund's account, an additional account (typically the general fund's liability to the departmental fund) is credited and an account (typically the department's EPC) is debited.

For the general fund, no fund-balancing debits and credits are specified.