Which of the following is true regarding internal service funds?

Question

Quizplus · Accepted Answer

Internal service funds use full accrual accounting, which means they record revenues when earned and expenses when incurred. This allows for accurate financial reporting and helps the organization make informed decisions about the cost-effectiveness of the services provided. Choice A is incorrect because internal service funds provide services primarily to internal users, such as other departments within the same government or organization. Choice B is incorrect because the annual budget is not recorded in the accounts, but rather serves as a planning tool for the internal service fund. Choice C is incorrect because capital assets are accounted for in the accounts of internal service funds, just like any other fund.

Which of the Following Is True Regarding Internal Service Funds