Lehi City has designated an internal service fund as the single fund to account for its self-insurance activities.Most of the insured activities such as the police department, fire department, and general government functions are accounted for in the General Fund.What is the maximum amount that can be charged to expenditure in the General Fund related to the self-insurance activities?

Question

Quizplus · Accepted Answer

The maximum amount that can be charged to expenditure in the General Fund related to the self-insurance activities is the actuarially-determined amount necessary to cover claims, expenditures, and catastrophic losses. This ensures that the General Fund is adequately budgeted for potential losses and ensures the financial stability of the city. In this scenario, the actuarially-determined amount is not provided, but it is suggested that the General Fund was charged $300,000 for premiums ($30,000 of which was for catastrophic losses) and incurred $250,000 in claims losses. Therefore, it is possible that the actuarially-determined amount would be higher than $300,000, but this cannot be determined without additional information.

Lehi City Has Designated an Internal Service Fund as the Single