Question: Each department in a large city maintains its own fleet
Each department in a large city maintains its own fleet of vehicles. The cost of purchasing and maintaining the vehicles is financed through the General Fund. One day, the mayor walks past the parking lot of the Parks Department and notices that many vehicles are not being used. The mayor calls her finance commissioner into the office and says: “Couldn’t we save money by setting up a central motor pool and requiring each department to use a pool vehicle whenever they need one?” The finance commissioner replies: “Yes, that will save us lots of money, but we will need to change our accounting system a bit to handle it.” Discuss the fund accounting implications of the finance commissioner’s reply.
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