Why are General Special Revenue and other governmental expen

Why are General, Special Revenue, and other governmental (expendable) funds typically controlled by fixed budgets integrated within the account structure, whereas Enterprise and other proprietary (nonexpendable) funds may be subject to less formal control through flexible budgets not integrated within the account structure? b.

Solution

Governmental or expendable funds involves General, Special Revenue, etc. The fiscal management of expendable or governmental funds involves allocating fixed amounts of financial resources among competing demands with the help of budgetary process. Formal appropriations that are made in fixed dollar amounts may not be exceeded legally.   There is integration of Appropriations and Encumbrances within the ledgers. This is done to enhance expenditure control by continually making available in the accounts data on the appropriations, actual expenditures to date, and encumbrances outstanding, both in detail and in total. Like Appropriations and Encumbrances, Estimated Revenues accounts are integrated within the ledgers to continually make available data on both estimated and actual revenues to date, in detail and in total. This helps in enhancing revenue management.

Proprietary or nonexpendable funds involves Enterprise, etc. These funds are established to account for business-type activities. Here, those business-type activities are accounted in which additional revenues are generated as goods or services are provided. Thus, both the resources available to finance expenses. These finance expenses vary directly with the demands for the goods or services involved. It can be said that flexible budgeting is more suitable in this situation. Activities may not be subjected to formal appropriations control so there may be no need to integrate budgetary accounts. There is automatic re-appropriation for the activity as the revenues are received.