Question

The General Fund used electricity provided by the city-owned electric utility (an enterprise fund of the city). The General Fund general journal entry to record the transaction will include

a. A debit to Due to Other Funds
b. A debit to Expenditures
c. A debit to Interfund Transfers out
d. A debit to Expenses

Answer 1

In recording the General Fund's usage of electricity from a city-owned electric utility (an enterprise fund), the correct journal entry would include b. a debit to Expenditures to reflect the service consumption.

Step-by-step explanation:

The student's question is about the recording of an intergovernmental transaction within a city's financial records, specifically between the General Fund and an enterprise fund of the city. When the General Fund uses electricity provided by the city-owned electric utility (an enterprise fund), the appropriate general journal entry to record this transaction will include a debit to Expenditures. This is because, from the perspective of the General Fund, this transaction represents a service being consumed for its operations, and thus, it is considered an expenditure.