Internal Service Funds Should Not Account for Depreciation of Capital

question 25

True/False

Internal service funds should not account for depreciation of capital assets used in their operations, since this would, in effect, charge the government twice for the same assets.

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Definitions:

Perpetuity

A type of annuity that pays an infinite series of cash flows, continuing forever.

Constant Rate

A fixed, unchanging rate at which a specific quantity grows or decays over time.

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once per year.

Compounded Monthly

A calculation method for interest where the interest earned is added to the principal at the end of each month, causing subsequent interest to be based on the increased balance.