Term bonds issued for building construction and maturing in ten years are typically retired from which fund?

• A. General Fund
• B. Capital Projects Fund
• C. Debt Service Fund
• D. Permanent Fund

Answer: (C)

Term bonds are long‑term debt that must be retired over time, often with a specific maturity date. A Debt Service Fund is the dedicated vehicle governments use to accumulate resources and pay the principal and interest on long‑term debt as it comes due. It’s the place where debt retirement activity happens, separate from operating activities or project financing. The Capital Projects Fund finances construction projects, not ongoing debt payments. The General Fund handles day‑to‑day operating revenues and expenditures, not dedicated debt retirement. The Permanent Fund holds resources restricted to earnings for specific programs, not debt service. So, the retirement of term bonds maturing in ten years is typically done through a Debt Service Fund.