Final answer:
The statement is true; long-term interfund loans are recorded as 'due from other funds' and 'due to other funds' in governmental financial records to reflect amounts that one fund owes to another within the same governmental entity.
Step-by-step explanation:
Long-term interfund loans are indeed recorded in the accounts titled 'due from other funds' and 'due to other funds'. These accounts are part of a governmental entity's financial statements and are used to track amounts that one fund owes to another. Thus, the statement in the question is true.
The use of interfund loan accounts reflects internal transactions within the government, symbolizing how various parts interact financially, much like various departments within a corporation might lend money to each other. These loans are typically meant for financing gaps or temporary mismatches between receipts and expenditures and are to be repaid over time, hence the term 'long-term'.
For example, say a city has a general fund and a capital projects fund. If the capital projects fund requires financing for a new community center and the general fund has surplus resources, a long-term loan might be issued from the general fund to the capital projects fund, which will be recorded as a liability in the capital projects fund ('due to other funds') and an asset in the general fund ('due from other funds').