Final answer:
An interfund transfer in a governmental operating statement is reported as either an 'other financing source' or 'other financing use', based on whether the fund is receiving or sending the transfer, and not as revenue or due from other funds. The correct option is a.
Step-by-step explanation:
An interfund transfer in a governmental fund operating statement should be reported as an other financing source or other financing use, depending on the direction of the transfer. When a governmental fund, like a state or local government fund, receives a transfer from another fund, it is reported as an 'other financing source.' This is similar to the inflows from intergovernmental grants which can be an important source of revenue during economic downturns. Conversely, when a fund sends money to another fund, it is reported as an 'other financing use.' These types of transactions are important for the financial management of government entities and are not recorded as revenue or as a due from other funds.
An interfund transfer in a governmental fund operating statement should be reported as b. Other financing use.
Interfund transfers involve the movement of funds between different funds within the same government entity. They typically occur when one fund provides financial resources to another fund for a specific purpose or to cover certain expenses.
For example, if a city government transfers money from its general fund to its transportation fund to support road construction projects, this would be considered an interfund transfer and reported as an other financing use in the governmental fund operating statement.