The city's central garage, which is accounted for as an Internal Service Fund, repairs and maintains all of the city's vehicles. The fire department is accounted for in the General Fund. The Central Garage Internal Service Fund sends a bill to the fire department for $18,000, which represents the cost of maintaining fire trucks for the month. The Central Garage Internal Service Fund should record

Question

Quizplus · Accepted Answer

The Central Garage Internal Service Fund should record the bill as Due from General Fund (an asset account) because they have not yet received payment from the fire department. Since the Internal Service Fund is providing a service to another department (the fire department), they should record the revenue earned from this service, which will be credited to the Revenues account. Therefore, the correct journal entry is to debit Due from General Fund and credit Revenues.

The City's Central Garage, Which Is Accounted for as an Internal