Chapter 3 illustrated the use of a single account (Fund Balance) to account for fund balance during the year even though GAAP financial statements must present up to five fund balance classifications. This chapter indicates that governments utilize two types of fund balance accounts-Unreserved Fund Balance and one or more fund balance reserves such as the Reserve for Encumbrances. Assuming that a government (1) adopts its General Fund budget on the modified accrual basis and (2) only maintains one reserve-the Reserve for Encumbrances, explain the relationship between the single Fund Balance account and the Unreserved Fund Balance and Reserve for Encumbrances accounts.