B is corrent because a Special Revenue Fund is like the General Fund, a governmental fund that accounts for current activities. The General Fund accounts for all transactions not accounted for in any other fund, which generally includes general revenues and expenditures for ordinary operations. A Special Revenue Fund accounts for revenues collected for a specific purpose, and include library taxes, motor fuel taxes, continuing federal housing grants, or gas taxes.
A is incorrect because an Internal Service Fund accounts for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis. In an Internal Service Fund, the accounting procedures are similar to those for private enterprises.
C is incorrect because a Capital Projects Fund accounts for the proceeds of a bond issue, federal grant, etc., to be used for a capital project such as a new school or library.
D is incorrect because an Enterprise Fund is used to account for business-type activities such as utilities. In an Enterprise Fund, the accounting procedures are the same as those for similar private enterprises.
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