A city levies a special property tax that is legally restricted to pay off the principal and interest on bonds issued to build the city's new police headquarters. Which fund should be used to account for the proceeds from the tax levy?

Question

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The special property tax is legally restricted to paying off the principal and interest on bonds issued to build the police headquarters. Therefore, the fund that should be used to account for the proceeds from the tax levy is the Debt Service Fund, which is used to account for resources that are restricted, committed or assigned to the payment of principal and interest on general long-term debt.

A City Levies a Special Property Tax That Is Legally