When an interfund transfer is received by the debt service fund, it is recorded as:

• A. Revenues
• B. Expenditures
• C. Other Financing Sources — Interfund Transfers In
• D. Assets

Answer: (C)

Interfund transfers between funds are financing activities, not operating revenues or expenditures. When the debt service fund receives a transfer from another fund, that inflow is recorded as an Other Financing Source — Interfund Transfers In. This reflects that the resource came from within the government’s funds (an internal transfer) and is used to finance debt service, rather than being earned revenue or an expense of the fund. The typical entry would debit cash (increasing assets) and credit Other Financing Sources — Interfund Transfers In (increasing the fund’s financing sources). The other options don’t fit because a transfer in isn’t revenue or an expenditure; it’s a financing source that increases the fund’s resources through an interfund transfer.