GASB accounting and financial reporting standards for risk financing activities provide that an internal service fund should recognize claims expense and a related liability when a claim has been asserted and

Question

Quizplus · Accepted Answer

According to GASB accounting and financial reporting standards for risk financing activities, an internal service fund should recognize claims expense and a related liability when it is probable that a loss has been incurred and the amount can be reasonably estimated. Option A is incorrect because a municipal court judgment is not required for the recognition of claims expense and liability in an internal service fund. Option B is incorrect because it is not enough to only have a possibility of a loss, it must be probable. Option D is incorrect because a loss must be reasonably estimated for it to be recognized.

GASB Accounting and Financial Reporting Standards for Risk Financing Activities