When a city received a private donation of $1,000,000 stipulating that the principal donation would be preserved but allowing the interest income to be spent on building a city park with access for disabled children, which fund should the money be recorded in?
A) The General Fund.
B) An Expendable Trust Fund.
C) A Permanent Fund.
D) An Agency Fund.
E) A Special Revenue Fund.

Question

Quizplus · Accepted Answer

A Permanent Fund is designed to hold and invest money for the long-term, with the intent to preserve the principal and use only the interest earned on the funds. This is exactly what the private donation stipulated, as the principal donation must be preserved and only the interest income used for the city park. Therefore, the Permanent Fund is the most appropriate fund to record the donation in.

When a City Received a Private Donation of $1,000,000 Stipulating