The General Fund of the City of Castle Rock transfers $115,000 to the debt service fund for a $100,000 principal and $15,000 interest payment. The recording of this transaction would include:

Question

Quizplus · Accepted Answer

BThe correct answers are B) A debit to Interest Expenditures in the governmental activities accounts, and C) A credit to Other Financing Sources - Interfund Transfers In in the debt service fund only. In governmental accounting, interest expenditures related to debt are recorded in the governmental activities accounts at the government-wide level. The transfer from the General Fund to the Debt Service Fund for debt payments is recorded as an "Other Financing Sources - Interfund Transfers In" in the receiving fund, which in this case is the Debt Service Fund. There is no double entry for transfers in both the fund and governmental activities accounts for the same transaction; they are recorded in the context of their respective accounting perspectives.

The General Fund of the City of Castle Rock Transfers