What is the entry for the annual payment made to a water utility?

The correct entry for the annual payment made to a water utility reflects how expenditures impact the governmental funds, particularly in the context of a general fund and the related liabilities. When the general fund incurs an expenditure such as payment to the water utility, it is essential to recognize the financial transaction appropriately.

The entry indicates that you would debit the General Fund Expenditure Control, which increases the expenditure account reflecting the outflow of resources from the general fund. This acknowledges the cost of the service provided by the water utility.

Simultaneously, crediting the Due to Water Utility Fund signifies that the government has a liability to settle for the service received. By making this entry, the financial records accurately reflect both the users’ incurred expenses and the outstanding obligation to pay the water utility. As the payment is made, the entry appropriately accounts for the expenditure and the corresponding liability, marking the completion of the transaction without any discrepancies.