The General Fund used electricity provided by the city-owned electric utility (an enterprise fund of the city). The General Fund general journal entry to record the transaction will include:

• A. A debit to Expenditures.
• B. A debit to Assets.
• C. A debit to Interfund Transfers.
• D. A credit to Revenues.

Answer: (A)

When the General Fund uses electricity from the city-owned enterprise fund, it is consuming a service provided by another fund. In fund accounting, the recipient fund records the cost as an expenditure in the period the service is used, not as an asset or as revenue. This reflects the consumption of resources. The corresponding credit would typically be an interfund payable to the enterprise fund, since the General Fund now owes the amount charged for the service.

So, the appropriate entry in the General Fund is to debit Expenditures to show the electricity expense. The other options don’t fit: it isn’t increasing an asset, it isn’t a transfer between funds, and it isn’t revenue for the General Fund (revenue would come from providing a service, not from consuming one).