A payment made by a city-owned utility to the General Fund of the city in lieu of taxes is an example of a transaction that is recorded in the governmental activities journal.

Question

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Payments made by a city-owned utility to the General Fund of the city in lieu of taxes are considered revenue for the government, and thus are recorded in the governmental activities journal. This is because the city-owned utility is a component unit of the government and its financial activities are included in the government's financial statements.

A Payment Made by a City-Owned Utility to the General