A city's museum is supported by a special tax levy and by user charges.The user charges constitute only 10 percent of the resources needed to support the operations of the museum.In which fund should the city account for its museum?

Question

Quizplus · Accepted Answer

A special revenue fund is appropriate when a specific revenue source (in this case, the special tax levy) is used for a particular purpose (supporting the museum). The fact that user charges make up only a small percentage of the museum's resources means that the fund should not be an enterprise fund, which is used when an activity is financed primarily through user charges rather than taxes or other revenue sources. An agency fund is used to hold assets on behalf of others and would not be appropriate for the museum's operations. An expendable trust fund is used to account for funds received through a trust arrangement, and there is no indication that the museum is funded through such an arrangement.

A City's Museum Is Supported by a Special Tax Levy