Note: This is a Kaplan CPA Review Question
A state government collected income taxes of $8,000,000 for the benefit of one of its cities that imposes an income tax on its residents. The state remitted these collections periodically to the city. The state should account for the $8,000,000 in the

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Quizplus · Accepted Answer

The state should account for the $8,000,000 in the Agency funds because it is collecting and holding the money temporarily on behalf of the city before remitting it. Agency funds are used to account for resources held by a government in a purely custodial capacity.

Note: This Is a Kaplan CPA Review Question