What are inter-fund reimbursements?

Inter-fund reimbursements refer specifically to the repayments made to funds that initially recorded expenditures or expenses, which is why this choice is correct. In a governmental accounting context, when one fund incurs an expense that benefits another fund, the fund that incurred the expense will later be reimbursed by the benefitting fund. This process helps ensure that each fund accurately reflects its costs and expenditures and maintains proper accountability.

By correctly accounting for these reimbursements, governmental entities can ensure that financial reports accurately represent the financial condition of each fund, thereby promoting transparency and effective budgeting. Such reimbursements do not represent a transfer of funds for other purposes, such as a capital project or reallocating resources between permanent funds, which would not fit the definition of reimbursements.