The city is using an internal service fund to self-insure its risk financing activities.Claims accrued or paid by this fund are recorded as:

Question

Quizplus · Accepted Answer

Claims accrued or paid by the internal service fund are considered operating expenses because they directly relate to the city's risk financing activities. Operating expenses are typically related to the ongoing activities of an organization, such as insurance premiums, employee salaries, and supplies. Transfers out, special items, and nonoperating expenses are not appropriate categories for recording claims incurred by the internal service fund.

The City Is Using an Internal Service Fund to Self-Insure