Which of the Following Statements Is Correct

question 131

Multiple Choice

Which of the following statements is correct?

• A) GASB standards require the use of internal service funds.
• B) Net position is unrestricted for an internal service fund.
• C) Internal service funds do not record long-term debt.
• D) Revenues for an internal service fund would be called Charges for Services rather than sales.

---

Definitions:

Service Life

The estimated period an asset is expected to be useful and productive for its intended purpose before it becomes obsolete or too costly to maintain.

Present Value

The current value of a future amount of money or stream of cash flows, discounted at a specific interest rate.

Capital Lease

A capital lease is a lease classified by the lessee as an asset on its balance sheet, indicating that it effectively has the economic ownership of the asset, even though legally it may not own the asset.

Lease Liability

An obligation representing future lease payments a lessee is required to make under a lease agreement.