Which type of funds account for special revenue sources with specific expenditure purposes?

Special revenue funds are specifically designed to account for the proceeds of specific revenue sources that are restricted or committed to expenditures for particular purposes other than debt service or capital projects. This means that the funds generated from these sources must be used for the intended special purpose as outlined by statute, regulation, or contractual agreement.

For instance, a special revenue fund could be established for purposes such as a highway development fund, where taxes collected from gasoline sales are designated solely for highway maintenance and improvement. This ensures that the funds are managed separately to maintain accountability and transparency regarding their use.

Other types of funds serve different functions: permanent funds focus on the principal amounts being preserved for long-term purposes while allowing for investment earnings to be used; debt service funds are utilized to manage the repayment of debt; and capital projects funds are dedicated to acquiring or constructing major capital assets. Each of these funds has its own specific objectives and uses, further emphasizing the unique nature of special revenue funds in handling revenues earmarked for designated expenditures.