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

The transfer of funds from the General Fund to the Debt Service Fund is considered a financing source for the Debt Service Fund. Therefore, the transaction would include a credit to "Other Financing Sources - Interfund Transfers In" in the Debt Service Fund only. The interest expenditure would already have been recorded in the General Fund when the interest was accrued. Also, the transfer does not affect the governmental activities accounts, so option B and D can be eliminated.

The General Fund of the City of Castle Rock Transfers