What is a fund balance?

• A. Cash on hand today
• B. Total worth of the fund - includes accruals
• C. Total annual revenue
• D. Amount of debt outstanding

Answer: (B)

Fund balance is the net resources of a fund. It measures the amount available for future spending and is essentially assets minus liabilities for that fund. This number reflects the resources that have been accumulated over time through past revenues and financing, and it includes accruals that are recognized as part of the fund’s assets and liabilities. It’s not just cash on hand, nor is it total annual revenue, nor the amount of debt outstanding. For example, if a fund has assets of 1.2 million and liabilities of 0.5 million, the fund balance is 0.7 million, representing the resources available for future use.