How do you distinguish special revenue, debt service, and capital projects funds?

author: AcadiFi Team

Answer:

Look at the purpose of the resources. A special revenue fund accounts for restricted or committed revenue sources used for specified operating purposes. A debt service fund accumulates resources to pay principal and interest on general long-term debt. A capital projects fund accounts for resources used to acquire or construct major capital assets.

For example, restricted gas-tax revenue for road maintenance points to a special revenue fund. Taxes set aside to pay bond principal and interest point to a debt service fund. Bond proceeds restricted for building a new courthouse point to a capital projects fund.