How are interfund loans treated and reported in fund statements versus government-wide statements?

How are interfund loans treated and reported in fund statements versus government-wide statements?

• A. In fund statements, interfund loans appear as long-term assets; in government-wide statements they are liabilities.
• B. In fund statements, they are not recorded; in government-wide statements they appear as interfund revenue.
• C. In fund statements, interfund loans appear as due from/due to balances; in government-wide statements, interfund activities are eliminated.
• D. In fund statements, interfund loans are recorded as investment income; in government-wide statements they are not reported.

Answer: (C)

Interfund loans are internal transactions between funds. In fund statements, the lending fund shows an asset labeled due from other funds, while the borrowing fund shows a corresponding liability labeled due to other funds. This keeps the loan visible at the fund level and reflects each fund’s claim or obligation. For government-wide statements, interfund activities are eliminated to avoid double counting resources when the government is presented as a single entity. Therefore, the interfund loan balances and related activity do not appear in the government-wide statements, even though they exist in the fund-level records.

Interfund loans are internal transactions between funds. In fund statements, the lending fund shows an asset labeled due from other funds, while the borrowing fund shows a corresponding liability labeled due to other funds. This keeps the loan visible at the fund level and reflects each fund’s claim or obligation.

For government-wide statements, interfund activities are eliminated to avoid double counting resources when the government is presented as a single entity. Therefore, the interfund loan balances and related activity do not appear in the government-wide statements, even though they exist in the fund-level records.