Question

An internal service provided and used by a state or local government Normally is displayed in the financial statements as a reimbursement. Requires recognition of an other financing source by the transferee fund and an other financing use by the transferor fund. Results in expenditures or expenses to buyer funds and revenues to seller funds. Is the internal counterpart to a nonexchange transaction.

Answer 1

Answer:

Results in expenditures or expenses to buyer funds and revenues to seller funds.

Explanation:

This entails that here, it normally is displayed in the financial statements as a reimbursement resulting in expenditures or expenses to buyer funds and revenues to seller funds.

In other words, revenue expenditures are typically referred to as ongoing operating expenses. Capital expenditures are typically one-time large purchases of fixed assets that will be used for revenue generation over a longer period because such assets provide income generating value for a company for a period of years, companies are not allowed to deduct the full cost of the asset in the year the expense is incurred; they must recover the cost through year-by-year depreciation over the useful life of the asset.

Answer 2

Answer:

C. Results in expenditures or expenses to buyer funds and revenues to seller funds.

Explanation:

Internal service funds are used by a department of government to fund goods and services provided by that department to another government agency in the same unit. It uses the cost-reimbursement principle. This means that the cost of goods and services provided by one agency of government can be billed on the receiving agency. That way all expenditure can be accounted for. It would also result in expenses to the buyer funds and revenue to the seller funds.

Examples of goods and services that can be accounted for under the internal service include; purchasing, printing services, motor pools, among others.