What kind of funds are tied directly to receipts, or earmarked for special purposes?

• A. General Funds
• B. Public Enterprise Funds
• C. Special Funds
• D. Revolving Funds

Answer: (C)

Special funds are funds designated for specific revenues or programs. They are set up to hold receipts that are legally restricted to a particular use, so money coming in is recorded to the special fund and can only be spent for the designated purpose. This ensures accountability and compliance with laws or appropriations. For example, revenues from a dedicated gas tax that must be used only for road construction would go into a special fund, and expenditures from that fund would be limited to that purpose. General funds cover the main operating activities without such restrictions, public enterprise funds support self-funded services charged to users, and revolving funds finance ongoing operations through replenished receipts. The key distinction is the legal or statutory earmarking of both the receipts and their use, which defines the special fund.