ExpertHard1 markMultiple Choice
CPA · Question 49 · Area 4: State and Local Governments
The General Fund transfers $50,000 to the Debt Service Fund to pay principal and interest. How is this transaction reported in the General Fund?
The General Fund transfers $50,000 to the Debt Service Fund to pay principal and interest. How is this transaction reported in the General Fund?
Answer options:
A.
Expenditure.
B.
Other Financing Use.
C.
Due from Debt Service Fund.
D.
Expense.
How to approach this question
Interfund Transaction Types: 1. Services (Revenue/Exp). 2. Loans (Due To/From). 3. Transfers (OFS/OFU). This is a transfer.
Full Answer
B.Other Financing Use.✓ Correct
B
Operating transfers between funds are classified as Other Financing Sources (in the receiving fund) and Other Financing Uses (in the paying fund). They are not expenditures.
Common mistakes
Classifying transfers as expenditures.
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