Final answer:
Special Revenue funds are E: Funds used to account for revenues that have been legally restricted as to expenditure, which are set aside for specific governmental activities and services.
Step-by-step explanation:
Special Revenue funds are used by governments to account for specific income streams that have been legally dedicated to funding particular activities, typically meant to provide services to citizens. The correct answer to the question is E: Funds used to account for revenues that have been legally restricted as to expenditure. These are not general-purpose funds but are instead tied to specific purposes or projects.
Federal, state, and local governments all collect various forms of revenue to support their budgets. For instance, federal spending encompasses both mandatory expenditures, such as entitlements, and discretionary spending, which is subject to annual review and approval by the legislative and executive branches.
To secure funding, government agencies receive allocations to deliver public services. State and local governments, as well as the federal government, must authorize spending before these revenues can be disbursed, supporting a wide array of services and programs that ultimately benefit citizens.