What must be reported as a fund liability?

Fund liabilities in governmental accounting are obligations that a fund must pay in the future. These typically include accounts payable, accrued liabilities, and notes payable that a governmental fund has accrued during its normal course of operations.

When considering the correct answer regarding what must be reported as a fund liability, the option indicating that any amount owed by a governmental fund to another fund of the primary government is essential. Inter-fund transactions occur frequently within governmental entities, where one fund borrows from another or where one fund owes services or goods to another. Reporting these amounts as liabilities ensures that the financial statements reflect the true fiscal position of the governmental fund.

By doing this, stakeholders can obtain a clear understanding of the entity's obligations, ensuring transparency and accountability regarding how different funds interact and support one another within the primary government's financial structure. This is crucial for proper financial reporting and compliance with governmental accounting standards.