If an Internal Service Fund provides 60% of its services to the General Fund and 40% of its services to an Enterprise Fund, then governmental activities column in the government-wide financial statements will

Question

Quizplus · Accepted Answer

The Internal Service Fund is a governmental activity, so its expenses are reported in the governmental activities column of the government-wide financial statements. Since the Internal Service Fund provides 60% of its services to the General Fund, 60% of its expenses are considered to be expenses of the General Fund. Therefore, the governmental activities column will reflect a reduction in expenses equal to 60% of the profit the Internal Service Fund reported for the year.

If an Internal Service Fund Provides 60% of Its Services