Question

Where public restricted funds are recorded
1. Special revenue fund
2. Permanent fund

Answer 1

Public restricted funds are recorded in special revenue funds and permanent funds.

Step-by-step explanation:

In accounting, public restricted funds are recorded in two types of funds: special revenue fund and permanent fund.

1. Special revenue fund: This fund is used to account for the proceeds from specific revenue sources that are restricted by law or regulation to be used for particular purposes. Examples of special revenue funds include a school lunch program, gasoline tax fund, or grants for a specific project.
2. Permanent fund: This fund is used to account for resources that are legally restricted, where only the earnings, not the principal, can be used for specific purposes. An example of a permanent fund is an endowment established for a university, where the principal amount is invested, and the earnings are used for scholarships or academic programs.