Current Financial Resources Measurement Focus
The current financial resources measurement focus is used only in the fund financials by funds that are governmental funds, which basically are the funds that are not proprietary funds. (For simplicity, a group of funds called fiduciary funds are being left out of this discussion. Accounting for these funds is discussed in
later chapters.)
Financial statements prepared using the current financial resources measurement focus, as its name implies, reflect changes in the financial resources available in the near future as a result of transactions and events of the fiscal period being reported. Increases in spendable resources are reported as revenues or other financing sources and decreases in spendable resources are reported as expenditures or other financing uses.
Since the current financial resources measurement focus is on the financial resources available in the near future, the operating statements and balance sheets of governmental funds in the fund financial statements reflect transactions and events that involved current financial resources: for instance, those assets that will be turned into cash and spent and those liabilities that will be satisfied with those current financial resources. In other words, long-term assets and those assets that will not be turned into cash to satisfy current liabilities are not reflected on the balance sheets of governmental funds in the fund financial statements. At the same time, long-term liabilities (those that do not require the use of current financial resources to pay them) will not be recorded on the balance sheets of governmental funds.
The remaining sections of this chapter discuss the nature of various asset, liability, and net asset amounts typically found in governmental financial statements. If the previous sections were understood, the reader will understand that different assets and liabilities are recorded on the government-wide financial statements than on the fund financial statements when there are governmental funds being reported. The following discussion pertains to amounts recorded on the government-wide financial statements—that is, assuming the accrual basis of accounting and the economic resource measurement focus are being used. This discussion will also pertain, in general, to the financial statements of proprietary funds. Where differences in accounting exist between these statements and the governmental fund financial statements, those differences will be discussed in the later chapters that describe the accounting for the various types of governmental funds.
Taken From : Governmental Accounting Made Easy