The General Fund of the City of Castle Rock Transfers

question 28

Multiple Choice

The General Fund of the City of Castle Rock transfers $115,000 to the debt service fund for a $100,000 principal and $15,000 interest payment. The recording of this transaction would include:

• A) A debit to Interest Expenditures in the General Fund.
• B) A debit to Interest Expenditures in the governmental activities accounts.
• C) A credit to Other Financing Sources - Interfund Transfers In in the debt service fund only.
• D) A credit to Other Financing Sources - Interfund Transfers In in both the debt service fund and governmental activities accounts.

---

Definitions:

Fixed General Factory Overhead

Costs associated with operating a factory that do not vary with the level of production, such as factory rent, insurance, and salaries of managers.

Variable Cost

Expenses that change in proportion to the activity of a business, such as cost of goods sold or materials costs.

Fixed Cost

Costs that do not vary with the level of output or production, such as rent, salaries, and insurance premiums.

Activity Level

A measure of the volume of production or operations, often used to plan and control various business activities.