Transfers from the General Fund to the Capital Projects Fund to partially finance a capital project would be reported by the Capital Projects Fund as which of the following?

• A. Revenue
• B. Other financing source
• C. Interfund receivable
• D. Special item

Answer: (B)

When a transfer from the General Fund to the Capital Projects Fund occurs, the receiving Capital Projects Fund treats that inflow as an other financing source. Transfers between funds are considered financing activities, not revenues, so they appear in the Capital Projects Fund’s statement as an increase under other financing sources, reflecting the additional resources available to fund the capital project. It isn’t recorded as revenue because it doesn’t come from the fund’s own operations or external market transactions. It also isn’t an interfund receivable, since a transfer is not a loan that creates a receivable; it’s a direct transfer of resources. And it isn’t a special item, which would denote unusual or infrequent events outside normal financing activities.