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 charged the Parks Department $30,000 for vehicle rentals. What account should the internal service fund use to record these charges?
A) Interfund Transfers In.
B) Interfund Exchanges.
C) Billings to Departments.
D) Cost of Providing Rentals to Other Funds and Units.

Question

Quizplus · Accepted Answer

The internal service fund should use the account "Billings to Departments" to record the charges for the vehicle rentals. This account is used to track the charges that the fund assesses to other departments or funds within the same government entity for the provision of goods or services. It allows for proper allocation of costs and provides transparency to the users of the services. The other options are not appropriate because they do not specifically relate to the charges for vehicle rentals.

The City of Crescent Hill Operates a Central Motor Pool