Final answer:
An interfund transfer is a movement of funds within a government for financial management, not payment for services. The statement in the question is False. Intergovernmental grants are transfers from the federal government to lower levels with specific conditions attached.
Step-by-step explanation:
An interfund transfer occurs not when one fund of government pays another fund of the same government for services provided, but rather when monies are moved from one fund within a government to another for financial management purposes. That statement is False. What the question may be referencing are intergovernmental transfers, which are important mechanisms for federal funding to flow to state and local governments. These transfers can be in the form of grants, such as grants in aid, where the federal government transfers money to states and local governments for specific initiatives with certain conditions attached. These grants should not be confused with transfer payments like Social Security or welfare, which are direct payments made to individuals and not between governmental funds.