Which statement about spending from the maintenance fund is true?

Which statement about spending from the maintenance fund is true?

• A. Only income can be spent; capital generally stays untouched.
• B. Both income and capital can be spent freely.
• C. Income must be kept separate from capital.
• D. Capital spending is prioritized over income.

Answer: (A)

Think of the maintenance fund as a trust with two parts: the principal (capital) and the earnings (income). The purpose is ongoing upkeep, not depleting the core amount. Expenditures for maintenance come from the income the fund earns, while the principal is kept intact to continue generating income in the future. This separation safeguards the fund’s ability to provide maintenance year after year, which is why the statement that only income can be spent and the capital stays largely untouched is the true representation. Using capital would erode the fund and compromise long-term maintenance, and spending capital first or prioritizing it over income would defeat the fund’s purpose.

Think of the maintenance fund as a trust with two parts: the principal (capital) and the earnings (income). The purpose is ongoing upkeep, not depleting the core amount. Expenditures for maintenance come from the income the fund earns, while the principal is kept intact to continue generating income in the future. This separation safeguards the fund’s ability to provide maintenance year after year, which is why the statement that only income can be spent and the capital stays largely untouched is the true representation. Using capital would erode the fund and compromise long-term maintenance, and spending capital first or prioritizing it over income would defeat the fund’s purpose.