A city's General Fund transfers $50,000 to a Debt Service Fund to pay principal and interest. How should the General Fund report this transaction?

Answer options:

Expenditure

Other Financing Use

Expense

Reduction of Revenue

How to approach this question

Interfund Transfers (Non-reciprocal) -> Other Financing Sources (Receiving Fund) / Uses (Paying Fund).

Full Answer

B.Other Financing Use✓ Correct

Transfers between funds are reported as Other Financing Uses (in the paying fund) and Other Financing Sources (in the receiving fund). They are not expenditures because the government as a whole hasn't spent the money yet.

Common mistakes

Classifying as Expenditure.

Question 44 All questions Question 46

Practice the full CPA BAR Practice Exam 3

50 questions · hints · full answers · grading

More questions from this exam

Q01Orion Manufacturing provides the following financial data for the current year:<br/><br/>- Net Sa...Hard Q02A manufacturing company uses a standard cost system. For the month of June, the following data is...Medium Q03A financial analyst is reviewing a company's sales data using a visualization tool. The scatter p...Medium Q04TechStart Inc. reports Net Income of $500,000. The income statement includes:<br/>- Depreciation ...Medium Q05A company produces two products, A and B. Under its traditional costing method, the company alloc...Medium

View all 50 questions →