ExpertEasy1 markMultiple Choice
CPA · Question 47 · Area III: State & Local Governments
The General Fund transfers $50,000 to a Debt Service Fund to pay principal and interest. How should the General Fund report this transaction?
The General Fund transfers $50,000 to a Debt Service Fund to pay principal and interest. How should the General Fund report this transaction?
Answer options:
A.
Expenditure
B.
Interfund Loan
C.
Expense
D.
Other Financing Use
How to approach this question
Interfund Transfers = Other Financing Sources/Uses. Services provided = Revenue/Expenditure.
Full Answer
D.Other Financing Use✓ Correct
D
Transfers of resources between funds are classified as 'Other Financing Sources' (transfers in) and 'Other Financing Uses' (transfers out) in the governmental fund financial statements.
Common mistakes
Calling it an expenditure.
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