Which fund type should be utilized for restricted resources that are required to be permanently invested?

The fund type specifically designed for restricted resources that must be permanently invested is the permanent fund. This type of fund is utilized when the principal amount of the fund is kept intact, with the income generated from investments being used for specific, allowable purposes as designated by the governing body or regulations. The primary characteristic of a permanent fund is that the principal is maintained, providing a continuous source of income over time.

In contrast, the general fund is used for the day-to-day operations of a government entity and does not specifically cater to the investment of restricted resources. Special revenue funds are set up for resources that are restricted for specific purposes but do not have the requirement for the principal to remain permanently invested. Therefore, while both special revenue funds and permanent funds handle restricted resources, only the permanent fund meets the criteria of being permanently invested and restricted.

Thus, the correct understanding centers on the unique provision of the permanent fund in maintaining an investment principal while allowing for the expenditure of earnings derived from that investment.