Which best describes a Special Revenue Fund?

Which best describes a Special Revenue Fund?

• A. Special Revenue Fund accounts for resources restricted for debt service only.
• B. Special Revenue Fund accounts for resources restricted for trust and pension funds.
• C. Special Revenue Fund accounts for resources restricted for a specific purpose other than capital projects or debt service; funded by grants, fines, or dedicated taxes.
• D. Special Revenue Fund accounts for resources restricted for capital projects only.

Answer: (C)

Special Revenue Funds are used to account for resources that are restricted to a specific purpose other than capital projects or debt service. These funds are typically funded by external sources such as grants, fines, or dedicated taxes, and the money must be spent only on that designated purpose. This makes the described scenario a classic example of a Special Revenue Fund. The other fund types serve different purposes: debt service resources are tracked in a Debt Service Fund; resources for trust and pension programs are held in Fiduciary (Pension/Trust) Funds; and resources restricted to capital projects go into Capital Projects Funds.

Special Revenue Funds are used to account for resources that are restricted to a specific purpose other than capital projects or debt service. These funds are typically funded by external sources such as grants, fines, or dedicated taxes, and the money must be spent only on that designated purpose. This makes the described scenario a classic example of a Special Revenue Fund.

The other fund types serve different purposes: debt service resources are tracked in a Debt Service Fund; resources for trust and pension programs are held in Fiduciary (Pension/Trust) Funds; and resources restricted to capital projects go into Capital Projects Funds.