A city's Internal Service Fund provides services only to general government departments. During the year, the Internal Service Fund reports operating revenue of 100,000, operating expenses of 80,000 and interest income of 10,000 .
What adjustments are needed to the governmental funds operating statement information to reflect these transactions in the statement of activities in the government-wide statement?
A. Increase revenue by 110,000 and decrease expenses by 80,000.
B. Increase revenue by 10,000 and decrease expenses by 20,000.
C. Decrease expenses by 80,000 and increase revenue by 10,000.
D. Decrease expenses by 30,000 and decrease revenue by 20,000.
Question 2
A government retired 5,000,000 of outstanding general obligation bonds when due. The government used 3,000,000 of proceeds from new bonds issued to provide resources for retiring the old bonds.
The other 2,000,000 had been accumulated from tax and interest revenues over the years that the old bonds were outstanding. The government should report this transaction in its Debt Service Fund as
A. Other financing uses of 5,000,000.
B. Expenditures of 5,000,000.
C. Other financing uses of 3,000,000 and expenditures of 2,000,000.
D. Other financing uses of 2,000,000 and expenditures of 3,000,000.
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