Which of the following would be considered an internal exchange transaction in interfund dealings?

• A. The General Fund transfers $9,000 to Central Supplies Fund for supplies it received from Central Supplies
• B. A grant from the state to the General Fund
• C. A donation from residents to a special fund
• D. A loan payable to a debt service fund

Answer: (A)

Internal exchange transactions happen when two funds within the government exchange goods or services for value, so each fund provides and receives something of comparable worth. In this example, Central Supplies Fund provides the supplies and the General Fund pays for them, making it a reciprocal exchange of value between funds. It would be recorded as interfund services provided and used (with corresponding receivable/payable), rather than as a simple transfer.

The other scenarios involve nonexchange or financing transactions with external parties or with no reciprocal exchange between funds, so they don’t fit the internal exchange pattern.