If an unexpended balance is funded from the Capital Fund Balance, where must it be returned when the ordinance is canceled?

If an unexpended balance is funded from the Capital Fund Balance, where must it be returned when the ordinance is canceled?

• A. Capital Fund Balance
• B. Current Fund
• C. Capital Improvement Fund
• D. Deferred Charges to Future Taxation - Unfunded

Answer: (A)

In fund accounting, funds earmarked for capital projects stay in the Capital Fund and have their own balance. If an ordinance is canceled, any unexpended balance that was funded from the Capital Fund Balance must be returned to the Capital Fund Balance. This preserves the restricted nature of those capital resources and prevents mixing with operating money or other funds. Returning it to the Current Fund would undermine the separation between capital and operating resources, and routing it to the Capital Improvement Fund or to Deferred Charges to Future Taxation - Unfunded would misplace funds that originated from the Capital Fund Balance.

In fund accounting, funds earmarked for capital projects stay in the Capital Fund and have their own balance. If an ordinance is canceled, any unexpended balance that was funded from the Capital Fund Balance must be returned to the Capital Fund Balance. This preserves the restricted nature of those capital resources and prevents mixing with operating money or other funds. Returning it to the Current Fund would undermine the separation between capital and operating resources, and routing it to the Capital Improvement Fund or to Deferred Charges to Future Taxation - Unfunded would misplace funds that originated from the Capital Fund Balance.