The Township of Thomasville's General Fund has the following net resources at year end:
•$77,000 of prepaid insurance
•$375,000 rainy day fund approved by the township governing board with specific conditions for its use
•$2,500 of supplies inventory
•$61,000 state grant for snow removal
•$150,000 contractual obligations for the purchase of equipment
•$200,000 to be used to fund government operations in the future
•Outstanding encumbrance of $80,000 for the purchase of furniture & fixtures (assume no contractual obligation)
-What would be the total Nonspendable fund balance?

Question

Quizplus · Accepted Answer

The nonspendable fund balance includes amounts that cannot be spent either because they are not in spendable form or they are legally or contractually required to be maintained intact.

The following items are considered nonspendable:
- Prepaid insurance: This is not available for spending until the coverage is provided.
- Supplies inventory: This is not a spendable resource until used.
- Outstanding encumbrance: This is not spendable until the purchase is completed.

Therefore, the total nonspendable fund balance is $2,500 + $77,000 + $80,000 = $79,500.

The other items are either restricted, committed, or assigned funds, and are not considered nonspendable.

The Township of Thomasville's General Fund Has the Following Net