A local government's utility sells part of its output to the primary government. The utility is accounted for in an enterprise fund.

In the comprehensive annual financial report, the sale of the utility's output most likely is accounted for as:

a. An interfund transfer.

b. Interfund receivables and payables in the government-wide statement of net position.

c. An elimination in the government-wide statement of activities.

d. Expenditures in the general fund.

Question

Business

Titus Nixon

31 August, 07:29

A local government's utility sells part of its output to the primary government. The utility is accounted for in an enterprise fund.

In the comprehensive annual financial report, the sale of the utility's output most likely is accounted for as:

a. An interfund transfer.

b. Interfund receivables and payables in the government-wide statement of net position.

c. An elimination in the government-wide statement of activities.

d. Expenditures in the general fund.

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Answers (1)

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Cheerio · Answer 1

D. Expenditures in the general fund

Explanation:

Interfund services provided and used are sales and purchases of goods and services between funds for a price approximating external exchange value. They should be reported as revenues in seller funds and expenditures or expenses in purchaser funds. Unpaid amounts should be reported as interfund receivables and payables in the fund statements. Thus, the enterprise fund (seller) reports revenues and the general fund (a governmental fund purchaser using the modified accrual basis of accounting) reports expenditures.