The Operation of Internal Service Funds Has Important Implications for Other

Multiple Choice

The operation of internal service funds has important implications for other funds. Which of the following statements isincorrect?

A) Charges for services of the internal service fund are recorded as expenditures in the governmental fund purchasing the services.
B) GASB standards require the use of internal service funds to facilitate comparisons between governments
C) If the expenditures for the purchasing entity is recorded in the General Fund, a positive operating income in the internal service fund would mean that the expenditures reported in the General Fund exceed the true cost of operating the government.
D) The problems created by internal service funds are resolved when the government-wide statements are prepared.