If a government receives a grant that is used partially for operating purposes, how is it classified?

When a government receives a grant that is used for operating purposes, it is classified as program revenues - operating grants. This classification reflects the nature of the financial support received, specifically indicating that the funds are intended to support ongoing operations and activities within the government, rather than being locked into specific capital projects.

Operating grants are typically designated to help cover costs associated with providing public services, such as education, healthcare, or social services. Since these grants are directed towards operational expenses, categorizing them as operating grants ensures clarity in financial statements regarding how these funds are being utilized.

In contrast, program revenues - capital grants would refer to grants designated for long-term asset acquisition or capital projects, which is not the focus in this scenario. General revenues - grants might suggest a broader funding source that is not specifically associated with operational needs and lacks the specificity of programmatic support. Operating revenues - federal grants might imply a focus solely on federal funds, which does not cover the broader range of possible granting entities often involved in operational grants. Thus, program revenues - operating grants is the most accurate classification for grants used for operating purposes.