What is the fund balance?

The fund balance represents the difference between a municipality's assets and liabilities. This calculation reflects the overall financial health and resources of the municipality at a given point in time. A positive fund balance indicates that the municipality has more assets than liabilities, which can be an indicator of financial stability.

In public finance, the fund balance is critical for understanding the municipality's ability to meet its ongoing obligations and fund future services. It encompasses various components, such as reserves for specific purposes and unrestricted funds that can be used at the municipality's discretion.

The other options do not accurately define the fund balance: total cash available in the municipal account pertains to liquidity, while net income relates to revenue and expenses over a specific period. The amount reserved for emergency expenditures may be a component of the fund balance but does not encompass the full definition of it. Thus, the correct answer reflects the comprehensive financial position represented by the difference between total assets and total liabilities.