A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.

Question

Quizplus · Accepted Answer

This is because the transfer of cash from the general fund to a debt service fund for the purpose of paying interest on debt does not involve an exchange or reciprocal transaction. Instead, it is a one-way flow of resources intended to fulfill a specific obligation, thus classified as a nonreciprocal transfer-out.

A Transfer of Cash from the General Fund to a Debt