Deck 7: Fiduciary Trust Funds

Question 1

GASB Standards require that IRS 457 Deferred Compensation Plans, if reported, be reported as pension trust funds.

Answer 1

True

Question 2

Property that has been abandoned or property whose owners cannot be found is turned over to the state government until the legal owners can be found is known as escheat property.

Answer 2

True

Question 3

Fiduciary funds include agency funds, private-purpose trust funds, investment trust funds and pension (or other employee benefit) trust funds.

Answer 3

True

Question 4

If a government is liable for payment of special assessment debt in the event of default by the property owners, then an agency fund must be used.

Question 5

Private-purpose trust funds account for donated resources that benefit the general citizenry.

Question 6

Fiduciary Fund activities report in terms of Additions and Deductions.

Question 7

Governmental investments in equity securities that have a determinable fair value are to be reported at fair value and any unrealized gains and losses are to be reported separately from realized gains and losses in the governmental operating statements.

Question 8

Fiduciary Fund activities report in terms of Revenues and Expenses.

Question 9

If a government had two pension plans; one a locally administered plan for which it is trustee and one a statewide plan to which it contributes; the government would report only the locally administered plan as a pension trust fund in the basic financial statements.

Question 10

The required financial statements for agency funds include a Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets.

Question 11

Fiduciary funds are reported in the government-wide financial statements.

Question 12

The term "fiduciary funds" include agency, pension trust, investment trust and permanent funds.

Question 13

Escheat property, often collected by the state is to be reported either in a private-purpose trust fund or in the fund to which the property ultimately escheats.

Question 14

Agency funds report no revenues, expenses or fund equity accounts.

Question 15

An investment trust fund is used to account for the external portion of a multi-government investment pool, when the reporting government is trustee.

Question 16

The Fiduciary Funds are not included in the Government-Wide Financial Statements.

Question 17

Unless use of an agency fund is mandated by law, by GASB standards or by decision of the governing board of a government, an agency relationship may be accounted for within governmental and/or proprietary funds.

Question 18

Fiduciary funds use accrual accounting.

Question 19

Governmental investments in debt securities, in all cases, are to be reported at amortized cost.

Question 20

Governments offering postemployment benefits to their retired employees must present two financial statements related to their plans: the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets, as well as additional required supplementary information.

Question 21

Governments that contribute to single employer and agent multiple-employer plans compute annual pension cost as the annual required contributions.

Question 22

A defined benefit plan will never have unfunded actuarial liabilities.

Question 23

Investment Trust Funds account for the external portion of investment pools.

Question 24

Governments that contribute to single employer and agent multiple-employer plans compute annual pension cost as the net pension obligation.

Question 25

Pension Funds are used to account for assets provided to pension trusts.

Question 26

Proprietary funds record unfunded pension obligations as a fund liability.

Question 27

Private-purpose Trust Funds are used to report trust arrangements, like scholarship
endowments.

Question 28

Governments that contribute to single employer and agent multiple-employer plans compute annual pension cost as the unfunded actuarial liability.

Question 29

Governments that contribute to single employer and agent multiple-employer plans compute annual pension cost as the normal cost.

Question 30

Reporting for Defined Benefit Pension Plans requires two supplementary schedules; the Schedule of Funding Progress and the Schedule of Employers Contributions.

Question 31

Defined contribution plans are required to pay retired employees a certain amount regardless of the amount contributed to the plan.

Question 32

Agency fund assets are offset by liabilities equal in amount, so no fund equity exists.

Question 33

The categories on the Statement of Changes in Fiduciary Net Assets are Additions and Deductions.

Question 34

Defined Benefit plans are required to pay retired employees a certain amount regardless of the amount contributed to the plan.

Question 35

Investment pools invested from external parties are recorded in Investment Trust Funds.

Question 36

The Accrual Basis and Economic Resource Focus are used for Private-Purpose, Investment Trust and Pension Funds.

Question 37

Unfunded pension obligations are not reported in the fund-basis statements for governmental funds.

Question 38

Defined contribution plans usually report unfunded actuarial liabilities.

Question 39

An endowment that is for the benefit of individuals and not the government controlling the funds, should be accounted for using a private-purpose trust fund.

Question 40

Fiduciary Funds use the Accrual basis of accounting and are not included in the government-wide financial statements.

Question 41

Investments in a private-purpose trust fund should generally be reported using cost basis.

Question 42

Investments in a private-purpose trust fund should generally be reported using fair market value.

Question 43

Internal investment pools, which account for investments of the reporting entity, are to be spread out to the funds providing the resources, when preparing financial statements.

Question 44

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations or other governments, an agency trust has been formed.

Question 45

The City of DeKalb contributes to three pension plans: (1) a statewide pension plan for nonuniformed personnel, (2) a locally administered plan for police officers and (3) a locally administered plan for firefighters. The City is trustee for the plans for police officers and firefighters. Which of the following is true?

A) The City would maintain trust funds for the police and fire plans but not the statewide plan
B) When making contributions from general fund resources to the police and fire plans, the general fund would debit Other Financing Sources-Transfers Out and the Pension Trust Fund would credit Transfers In
C) Both of the above
D) Neither of the above

Question 46

Which of the following is true regarding the financial statements of fiduciary funds?

A) Fiduciary funds' financial statements include the Statement of Fiduciary Net Assets, the Statement of Changes in Fiduciary Net Assets and the Statement of Fiduciary Cash Flows
B) Fiduciary funds are accounted for using the economic resources measurement focus and accrual basis of accounting
C) Both of the above
D) Neither of the above

Question 47

Investments in a private-purpose trust fund should generally be reported using the equity method.

Question 48

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations or other governments, an investment trust has been formed.

Question 49

Fiduciary Funds are reported by fund type.

Question 50

Which of the following is true regarding agency funds?

A) Agency funds report assets and liabilities, but not net assets, revenues or expenses
B) Agency funds are often used to account for property tax collections by county governments for other governments
C) Both of the above
D) Neither of the above

Question 51

The City of Sycamore has investments in bonds. These bonds have an amortized cost of $998,000 and a market value of $1,001,000. The market value is quoted and available in the financial press. The original cost of the bonds was $996,000. The par value at maturity will be $1,000,000. The amount at which the investments would be reported is:

A) $ 996,000
B) $ 998,000
C) $ 1,000,000
D) $ 1,001,000

Question 52

Investments should be recorded at fair market value unless a government has sufficient investments in a company to apply the equity method.

Question 53

Pension trust funds are required to present a Schedule of Funding Progress and a Schedule of Employer Contributions as required supplementary information.

Question 54

Ford County levies for its General Fund $1,000,000 in property taxes. In addition, the county is responsible for collecting $2,000,000 in property taxes for the consolidated school district and $500,000 in property taxes for a town within the county. 2% of all taxes levied are expected to be uncollectible. When recording the levies in an agency fund, what amount would Ford County record as Taxes Receivable for Other Governments - Current and Due to Other Governments?

A) $2,500,000
B) $2,450,000
C) $3,500,000
D) $3,430,000

Question 55

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations or other governments, a private-purpose trust has been formed.

Question 56

Fiduciary Funds are reported by activity.

Question 57

Financial reporting requirements for a defined benefit pension plan includes a schedule of employee contributions.

Question 58

GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, does not apply to which of the following investment types?

A) External investment pools
B) Open-end mutual funds
C) Debt securities
D) Investments of pension funds

Question 59

Which of the following is true regarding fiduciary funds?

A) Investment trust funds account for the internal portion of an investment pool, when a government is trustee for that pool
B) Private-purpose trust funds account for resources that are administered by a government for the benefit of others, such as a fund held to distribute resources to local not-for-profit charities
C) Both of the above
D) Neither of the above

Question 60

In an agency fund the government is acting as an agent for another entity and therefore they do not have rights to these types of funds.

Question 61

Clinton County maintains an investment trust fund for the investments of governments within its borders. All the investments had determinable fair values. Which of the following is true regarding investment trust funds and investments in general?

A) Clinton County would report the investments of the other governments at fair value in the investment trust funds
B) Clinton County would also report its own investments at fair value in the investment trust funds
C) Both of the above
D) Neither of the above

Question 62

Which of the following is not true regarding postemployment benefit plans other than pension plans?

A) Most governments have operated on a pay-as-you-go basis and plan net assets are small relative to benefits promised
B) GASB Statement No. 43, Financial Reporting for Postretirement Benefit Plans Other Than Pension Plans, requires that such plans be fully funded
C) Similar to pensions, governments are required to present two financial statements, the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets
D) Two schedules must be included as required supplementary information: the Schedule of Funding Progress and the Schedule of Employer Contributions

Question 63

Which of the following is true regarding pension (and other employee benefit) trust funds?

A) The actuarially computed Pension Benefit Obligation is reported in the Statement of Fiduciary Net Assets
B) While full accrual accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Assets in lieu of "revenues" and "expenses"
C) Both of the above
D) Neither of the above

Question 64

Which of the following is true regarding accounting for investments by state and local governmental units?

A) Investments in all securities with determinable fair values (including bonds held to maturity) are to be reported at fair value
B) Realized gains and losses are to be reported separately from unrealized gains and losses in the Statement of Changes in Fiduciary Net Assets
C) Both of the above
D) A or B above

Question 65

Where in the Comprehensive Annual Financial Report would one find the accrued actuarial pension liability, in cases where the government has made the required annual contributions?

A) The Statement of Fiduciary Net Assets
B) The Required Supplementary Information Schedule of Funding Progress
C) Both of the above
D) Neither of the above

Question 66

Which of the following is true regarding pension accounting and reporting for state and local governments?

A) When the General Fund makes a contribution to a pension trust fund, the account "Expenditures" is debited
B) The Statement of Changes in Fiduciary Net Assets reports "additions" and "deductions," computed on the accrual basis
C) Both of the above
D) Neither of the above

Question 67

The tax agency fund of Fulton County collected $6,000,000 for a school district, $3,000,000 for the county general fund and $4,000,000 for a municipality. County general fund employees handle the collections and a 3 percent collection fee is charged all units except the county. The total amount of revenue recognized by the county general fund would be:

A) $2,910,000
B) $3,000,000
C) $3,090,000
D) $3,300,000

Question 68

Which of the following is true regarding fiduciary funds?

A) Fiduciary funds use the financial resources measurement focus and accrual accounting
B) Fiduciary funds include pension (and other employee benefit) trust, investment trust, agency and permanent funds
C) Both of the above
D) Neither of the above

Question 69

The County of Churchville is trustee for a multi-government investment pool and has established an investment trust fund. Included in the investment trust fund, for management purposes, are investments in the amount of $15 million from the County's General Fund, $2 million from the County's special revenue funds and $112 million from other governments. Which of the following would be true?

A) The County would report the $112 million in an investment trust fund and the$17 million in a permanent fund
B) The County would report the $112 million in an investment trust fund, the $15 million in its General Fund and the $2 million in special revenue funds
C) The County would report the entire $129 million in an investment trust fund
D) The County would report the entire $17 million in an investment trust fund

Question 70

Which of the following is true regarding fiduciary funds?

A) When a government is trustee for a defined benefit pension plan, two RSI schedules are required: a schedule of funding progress and a schedule of employer contributions
B) Escheat property proceeds must be reported in either a private-purpose trust fund or the fund to which the property ultimately escheats
C) Both of the above
D) Neither of the above

Question 71

When accounting for other postemployment benefits, the OPEB obligation is:

A) Reported in the government-wide statements, but not the fund basis statements
B) The cumulative difference between the amount funded and the annual required contribution
C) Both A and B
D) Neither A nor B

Question 72

The City of Springfield has three pension plans: a locally administered police plan for which it is trustee, a statewide cost sharing plan and a statewide agency plan. The City would include in its CAFR financial statements for:

A) All three plans
B) The locally administered plan plus the statewide agency plan
C) Both statewide plans
D) The locally administered plan only

Question 73

James McHughes gave the following to the City of Carnesville in order to establish a private-purpose trust: Land - cost, $250,000; fair market value as of the date of the gift, $200,000.
Securities - cost, $800,000; fair market value as of the date of the gift, $900,000.
The amount to be recorded as additions for gifts by the private-purpose trust fund would be:

A) $1,000,000
B) $1,100,000
C) $1,150,000
D) $1,170,000

Question 74

Which of the following is true regarding fiduciary funds?

A) Fiduciary funds are not included in the government-wide financial statements
B) Fiduciary funds include agency, pension (and other employee benefit) trust, private-purpose trust and investment trust funds
C) Both of the above
D) Neither of the above

Question 75

The tax agency fund of Eden County collected $2,000,000 for the Eden School District, $1,000,000 for the Village of Edenton, $1,200,000 for the Eden Park District and $700,000 for Eden County. County General Fund employees handle the collections and a 2 percent collection fee is charged all units except the county. The amount to be remitted to the county General Fund would be:

A) $700,000
B) $784,000
C) $770,000
D) $4,200,000

Question 76

The amount to be recorded as additions for gifts by the private-purpose trust fund would be:

A) $1,000,000
B) $1,100,000
C) $1,150,000
D) $1,170,000

Question 77

A statewide pension plan exists for all local governments in a certain state. The provisions of the plan indicate that each qualifying retiree receive 2% multiplied by the number of years active employment multiplied by the average salary for the past four years of service. The government calculates the actuarial liability on a statewide basis, not by individual government. The plan would be known as a (an):

A) Multiple-employer, defined benefit, agency plan
B) Multiple-employer, defined contribution plan
C) Multiple-employer, defined benefit, cost-sharing plan
D) Single employer plan

Question 78

Which of the following is true regarding the reporting of investments by state and local governmental units?

A) Investments, for which a determinable fair value can be obtained, are to be reported at fair value
B) Realized and unrealized gains and losses are to be combined in the relevant operating statement (for example, the Statement of Changes in Fiduciary Net Assets)
C) Both of the above
D) Neither of the above

Question 79

Which of the following is true regarding fiduciary funds?

A) Fiduciary funds are included in the government-wide statements but not in the fund statements
B) Fiduciary funds are reported by fund type, not as major funds
C) Both of the above
D) Neither of the above

Question 80

According to GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, investments of internal investment pools are to be reported in:

A) The funds providing the resources for the investments
B) An investment trust fund
C) Either A or B
D) Both A and B