Question

What is the purpose of an internal service fund? What advantages and disadvantages do you see? What do you see as being compatible to for-profit companies in terms of financial reporting?

(PLEASE TYPE YOUR ANSWER SO THAT IT IS LEGIBLE AND WE CAN READ IT. THE LAST TWO QUESTIONS I ASKED SOMEONE WROTE IT OUT IN HORRIBLE HANDWRITING, PLEASE TYPE).

Answer 1

purpose of internal service fund- internal service fund is used in governmental accounting.if it is shifting the goods or services from one department to another department it will help to track that goods and services details on a cost reimbursement basis.

advantages and disadvantages of internal service fund-

1)it helps to fully utilize the equipment as well as staff.

2)long term -it helps to plan for long term break even with no incentives as isf can carry funds over from year to year rather than operate the yearly cycle.

3)it helps the user to find out the cost of the private sector or the state agencies and and to compare the cost with isf and then the user can buy the product or services.

4)it helps the decision makers to have the control over goods or services delivered.and also it helps to provide more useful and accurate information for decision makers

5)isf will accumulate funds to replace their equipment when its useful life expires by charging for depreciation through their rates.

Dis advantages of internal service fund

1)some agencies will provide home services more cheaply than isf,for that kind of agencies isf can become overhead burden.

2)users will compare the price of the private sector and isf ,in some cases customers required to use the service of isfs ,therefore i isfs will not be having the chance to lower the cost of the service and to provide the customer service.

3)isfs is not managing the cost as other agencies.

4)lsf financial report will be complicated as compared to other reports because the financial reports of the isf financial report format will be complicated to understand.