Which fund classification is used for resources limited to a specific purpose other than debt service or capital projects?

The classification of special revenue funds is designated for resources that are limited to specific purposes other than debt service or capital projects. This means that the funds collected are intended for particular activities or services that fall within the government’s operational scope, such as public safety, education, or health services.

Special revenue funds are distinct from other classifications because they are supported by specific revenues that must be used to finance those designated services. For instance, if a government imposes a tax on a specific activity, such as a hotel occupancy tax, the revenue generated can only be used for certain approved expenditures, which may include tourism promotion or infrastructure maintenance related to that activity.

This classification is crucial in governmental accounting as it ensures that resources are allocated appropriately according to their intended purposes, thereby enhancing accountability and transparency in public financial management.