A City's Police Department Receives Goods from an Internal Service

question 55

Multiple Choice

A city's police department receives goods from an Internal Service Fund for which it has not yet paid the ISF. To record this transaction the city should record a credit to what account in the General Fund?

• A) Due to the Internal Service Fund.
• B) Advance from the Internal Service Fund.
• C) Vouchers payable.
• D) Reserve fund balance.

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Definitions:

Manufacturing Overhead Cost

Indirect costs related to manufacturing that are not directly tied to a specific product, including utilities and maintenance of equipment.

Overhead Cost

Represents the expenses not directly tied to the production of goods or services, including rent, utilities, and administrative costs.

Direct Labor Cost

The cost of wages and benefits for employees who are directly involved in manufacturing a product or delivering a service.

Manufacturing Overhead

All indirect costs associated with the production process, excluding direct materials and direct labor costs.