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.What account should the internal service fund use to record these billings?

Question

Quizplus · Accepted Answer

The internal service fund should use the account "Billings to Departments" to record the $30,000 it charged the Parks Department for vehicle rentals. This account will show the revenue earned by the fund for the services provided to the other departments. Alternatively, the account "Cost of Providing Rentals to Other Funds and Units" would be used to record the cost of providing these services, but this is not the account that should be used to record the billings. The options A and B are both incorrect as they are used for transactions between different funds, not between a fund and a department within the same entity.

The City of Crescent Hill Operates a Central Motor Pool