Internal Service funds use the accrual basis of accounting.

Question

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Internal Service funds are used by governments to account for the provision of goods or services to other departments or agencies of the same government. These funds use the accrual basis of accounting which means that revenue is recognized when earned regardless of when cash is received, and expenses are recognized when incurred regardless of when cash is paid out. This is done to provide a more accurate picture of the fund's financial position and performance.

Internal Service Funds Use the Accrual Basis of Accounting