What type of expenditures does character classification include?

Character classification in governmental accounting refers to the way expenditures are categorized based on the timing and purpose of the spending. This classification includes current expenditures, capital outlay expenditures, and debt service expenditures.

Current expenditures represent the costs associated with ongoing government operations, such as salaries, utilities, and supplies needed for day-to-day functions. Capital outlay expenditures involve spending on long-term assets, like buildings and infrastructure, which provide benefits over several years. Debt service expenditures pertain to payments related to the principal and interest on the debt, ensuring that the government honors its borrowing commitments.

By including all three categories—current, capital outlay, and debt service expenditures—character classification provides a comprehensive view of government spending, highlighting not only immediate operational costs but also investments in long-term assets and obligations to service debt. This holistic approach allows for better financial reporting and budgetary planning, which is essential for effective governmental financial management.