A Government Plans to Create an Internal Service Fund to Account

question 9

Short Answer

A government plans to create an Internal Service Fund to account for its new central warehouse. The General Fund loans the Internal Service Fund $100,000, which is going to pay back the loan interest-free in five years. The entry in the Internal Service Fund to record this transaction would be $\begin{array}{llr}&&\text { Debit }&\text {Credit }\\ \text { A.} & \text { Cash } &\$100,000\\& \text {Revenue } &&\$100,000\\\\ \text { B. } & \text { Cash } &\$100,000\\& \text {Capital Contribution } &&\$100,000\\\\ \text { C. } & \text { Cash } &\$100,000\\& \text { Transfer from General Fund } &&\$100,000\\\\ \text { D. } & \text { Cash } &\$100,000\\& \text { Advance finm General Find} &&\$100,000\\\end{array}$

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Definitions:

Health Insurance

A type of insurance coverage that typically pays for medical, surgical, prescription drug, and sometimes dental expenses incurred by the insured.

Moral Hazard Problem

A situation in economics where one party is more likely to take risks because the negative consequences of the risk will be felt by another party, often seen in insurance and finance sectors.

Health Care Market

The aggregate of all businesses and organizations involved in the provision and funding of health care services, including hospitals, insurance companies, and pharmaceutical companies.

Underallocated Resources

Refers to a situation where resources are not being used to their full potential within an economy, often resulting in inefficiencies and lost output.