Internal service funds utilize encumbrance accounting.

Question

Quizplus · Accepted Answer

Internal service funds, which are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis, do not use encumbrance accounting. Encumbrance accounting is typically used in governmental funds to record outstanding commitments for unperformed contracts for goods or services.

Internal Service Funds Utilize Encumbrance Accounting