The city's electric utility fund sent $1,000,000 to the General Fund to help cover the city's operating costs. This transaction would be recorded in the governmental activities journal as

• A. An interfund transfer in
• B. An interfund transfer out
• C. Revenue
• D. Interfund loan

Answer: (A)

Interfund transfers are a way for funds within the same government to move resources between each other. They are not revenues or loans. When the electric utility fund sends cash to the General Fund to help cover operating costs, the General Fund records the receipt as an interfund transfer in, which increases cash but is classified as a financing source rather than operating revenue. The mirror entry in the transferring fund would be an interfund transfer out, reflecting the cash given. This distinction makes the transfer in the General Fund the appropriate recording, rather than treating it as revenue or a loan.