Question

Lake County received the following proceeds that are legally restricted to expenditure for specified purposes: Levies on affected property owners to install sidewalks: $500,000 Gasoline taxes to finance road repairs: $900,000 What amount should be accounted for in Lake’s special revenue funds?

Answer 1

The amount should be accounted for in Lake’s special revenue fund is $900,000

Step-by-step explanation:

Specific Purpose: The purpose which is made for a very specific reason. It is not of any general nature, it always met for any specific purpose or a specific reason.

In the given question, the $500,000 was invested to install the sidewalks whereas the $900,000 invested for repairing a road in respect to gasoline taxes.

So, in the given case the $900,000 should be recognized as a specific purpose expenditure because it is a legally restricted for legal purpose.