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?
A)The amount of "premium" charged to the General Fund by the internal service fund.
B)The amount of actual losses incurred by the insurance activity.
C)The actuarially determined amount necessary to cover claims, expenditures, and catastrophic losses.
D)The amount transferred from the General Fund to the internal service fund for self-insurance purposes.

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 appropriately reserving funds for potential losses and is not relying solely on the premium charged by the internal service fund or actual losses incurred.

Lehi City Has Designated an Internal Service Fund as the Single