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:

Expenditure

Interfund Loan

Expense

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

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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