Question

The City of Crescent Hill operates a central motor pool as an internal service fund for the benefit of the city’s other funds and departments. In the current year, this fund billed the Parks Department $30,000 for vehicle rentals. If the Parks Department is a governmental fund, which account should the Parks Department use to record these billings?

Answer 1

Answer:

C) Expenditures

Explanation:

The city classifies this central motor pool as an internal service fund (a type of proprietary fund) but this must report its transactions as governmental activities (they are public funds, not private funds). As such, this type of transactions must be reported as expenditures or expense accounts.