A county uses an agency fund to collect property taxes for both itself and on behalf of the three municipalities within its borders. If the county collected $10,000 of taxes during the month-$2,000 of its own taxes and $8,000 on behalf of the other municipalities, what would be reported in the agency fund?

Question

Quizplus · Accepted Answer

Agency funds are used to account for resources held by a government in a purely custodial capacity. They do not report revenues or expenses because these funds do not reflect the operations of the government itself but rather the assets it holds for others. In this case, the $8,000 collected on behalf of the municipalities increases the assets and liabilities of the agency fund, reflecting the county's obligation to pass these funds to the municipalities.

A County Uses an Agency Fund to Collect Property Taxes