Which fund type is used to finance major capital expenditures?

• A. Capital Projects funds finance major capital expenditures.
• B. General Fund finances major capital expenditures.
• C. Debt Service funds finance major capital expenditures.
• D. Special Revenue funds finance major capital expenditures.

Answer: (A)

Capital Projects funds are designed to finance major capital expenditures such as construction, major renovations, or acquisition of long-lived assets. They hold resources specifically designated for capital projects and are typically funded by bond proceeds, grants, or transfers from other funds. This focus on large, non-operating investments that expand or improve the government’s asset base makes it the right tool for financing major capital expenditures. General Fund covers day-to-day operations, Debt Service funds accumulate resources to pay debt principal and interest, and Special Revenue funds track resources restricted to specific programs rather than broad capital projects.