A city government collects taxes that are restricted by state law to be used specifically for road maintenance. Which fund should account for these resources?

Answer options:

General Fund

Special Revenue Fund

Capital Projects Fund

Enterprise Fund

How to approach this question

Match the restriction to the fund type. Restricted for specific purpose (operating) -> Special Revenue.

Full Answer

B.Special Revenue Fund✓ Correct

Special Revenue Funds account for the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.

Common mistakes

Using General Fund for restricted items.

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