The City of Crescent Hill operates a central motor pool as an internal service fund for the benefit of the city's other funds and departments. In the current year, this fund billed the Parks Department $30,000 for vehicle rentals. If the Parks Department is a governmental fund, which account should the Parks Department use to record these billings?
A) Interfund Transfers In.
B) Interfund Exchanges.
C) Expenditures.
D) Cost of Rentals from Other Funds and Units.

Question

Quizplus · Accepted Answer

The Parks Department, being a governmental fund, should record the billings for vehicle rentals as Expenditures. This is because the transaction represents a purchase of services from another fund within the same government, which is treated as an expenditure in governmental accounting.

The City of Crescent Hill Operates a Central Motor Pool