Which of the following is generally not an expense allocated to a government function or program?

• A. Salaries for program staff
• B. Overhead charges allocated to programs
• C. Interest on general long-term liabilities
• D. Depreciation expense

Answer: (C)

In government financial reporting, most costs are assigned to the function or program that they help operate, so that the cost of delivering a service is visible. Salaries for program staff are a direct program cost and are allocated to the specific program they support. Overhead charges allocated to programs reflect indirect costs that Support multiple activities but are distributed to the programs that incur the benefits. Depreciation expense represents the wear and tear on capital assets used by a program and is allocated to that program to reflect the ongoing use of those assets.

Interest on general long-term liabilities is different. It arises from financing the government's debt rather than from delivering a particular program service. Because it is a financing cost not tied to a specific program’s activities, it is generally not allocated to a government function or program and is reported separately as interest expense or a debt-service item.