Question 1

A Private-Purpose Trust Fund has investments totaling $1,500,000. As of the end of the fiscal year, the fair market value of these investments increased by $125,000 from the previous year. The Private-Purpose Trust Fund would

Accepted Answer

The increase in fair market value of the investments represents an addition to the trust fund's resources. Therefore, it should be reported as additions rather than revenues or transfers. The trust fund does not need to sell the investments to recognize the increase in value.

Question 2

If an Enterprise Fund transfers employer contributions to the Pension Trust Fund, which of the following best describes the effect of the transaction on each fund?

Accepted Answer

When an Enterprise Fund transfers employer contributions to the Pension Trust Fund, the Enterprise Fund will report expenses since it is making a contribution, while the Pension Trust Fund will report additions since it is receiving the contribution. Therefore, the correct choice is C.

Question 3

The General Fund transfers $75,000 of employer pension contributions to the Pension Trust Fund. The Pension Trust Fund should

Accepted Answer

The Pension Trust Fund should report additions of $75,000, as this represents the transfer of employer pension contributions from the General Fund. This is not a revenue, expense, or transfer for the Pension Trust Fund.

Question 4

A local citizen donated land to the city's Private-Purpose Trust Fund. The land has a fair market value of $50,000 but the donor's basis was $45,000. The trust fund will report

Accepted Answer

The trust fund will report additions at the fair market value of the donated land, which is $50,000.

Question 5

The General Fund transfers $25,000 withheld from employee's gross pay during the last quarter to the Pension Trust Fund. Which of the following statements regarding this transaction is true?

Accepted Answer

The General Fund reduces its liability as it transfers the withheld amount, and the Pension Trust Fund records additions as it receives the funds.

Question 6

Which of the following statements are required for a Tax Agency Fund?

Accepted Answer

The answer of Which of the following statements are required...

Question 7

Which financial statements are required for a private purpose trust fund?

Accepted Answer

Private purpose trust funds are a type of fiduciary fund and are required to follow the accounting standards for fiduciary funds, which require a statement of net position and a statement of changes in net position. A statement of revenues, expenses, and changes in net position is not required as these funds are not expected to generate significant revenue or expenses. A statement of cash flows is also not required as fiduciary funds do not have operating activities that generate or use cash.

Question 8

Equity in a fiduciary fund is referred to as

Accepted Answer

Equity in a fiduciary fund is referred to as net position, as the fund does not have a fund balance like other funds because its assets must be held in trust for another entity. Retained earnings and contributed capital are terms used in proprietary and governmental funds.

Question 9

Which of the following is not reported in the schedule of funding progress for a defined benefit pension plan?

Accepted Answer

The schedule of funding progress typically includes the actuarial value of assets, actuarial accrued liability, and covered payroll, but not the percentage of the annual required contribution actually contributed.

Question 10

A government establishes an Investment Trust Fund. During the year, it receives $500,000 from other separate legal entities to invest. The Investment Trust Fund should report this activity in the statement of changes in net position as

Accepted Answer

Investment Trust Funds report inflows of resources from external entities as "additions" in their statement of changes in net position, reflecting the increase in resources available for investment or management by the fund.

Question 11

At year end, a county tax agency fund's only asset was $500,000 in cash. The cash was collected on behalf of the following entities: County-$300,000
School district-$150,000
Fire district-$50,000
In the county basic financial statements, the tax Agency Fund should report what amount of assets and liabilities?

Accepted Answer

The answer of At year end, a county tax agency...

Question 12

A government receives a donation of $300,000 to establish a Private-Purpose Trust Fund. The donation should be reported as

Accepted Answer

The donation of $300,000 should be reported as an addition to the Private-Purpose Trust Fund. This is because it represents an inflow of resources that increases the fund's balance and is intended for a specific purpose, which is to establish the trust fund. It is not reported as revenue because it is not earned by the government through its ordinary activities, nor is it reported as other financing sources because it does not represent a borrowing or repayment of debt. It is also not a special item because it is not unusual or infrequent in nature.

Question 13

The municipalities for whom the county collects property taxes paid $5,000 in administrative fees to county to cover collection costs. The county will report

Accepted Answer

The $5,000 in administrative fees paid to the county by the municipalities for collecting property taxes is considered a revenue for the county and should be reported in the General Fund. This is because the General Fund is the primary operating fund of a government, and such administrative fees are typically considered operating revenues.

Question 14

Which of the following accounts would typically be reported in an agency fund?

Accepted Answer

Agency funds are used to account for resources held by a government in a trustee capacity for others, and "Due to Other Governments" reflects liabilities to other entities, which is consistent with the nature of agency funds.

Question 15

Which of the following are reported for a private-purpose trust fund?

Accepted Answer

The answer of Which of the following are reported for...

Question 16

In a Tax Agency Fund, revenues must be recognized

Accepted Answer

Agency Funds are custodial in nature and do not report revenues or expenses as they are simply holding assets in a fiduciary capacity for others.

Question 17

Additions reported in the statement of changes in plan net position of a pension plan commonly include all of the following except

Accepted Answer

Actuarial gains from the revision of actuarial assumptions are typically reported in the pension plan's statement of net assets or in the footnotes, rather than in the statement of changes in plan net position. The statement of changes in plan net position primarily reflects actual transactions during the period, such as employer and employee contributions, as well as the net appreciation or depreciation in the fair value of investments.

Question 18

The local school board received a donation of $1,000,000 to establish a scholarship fund for graduating students. The scholarship is accounted for in a Private-Purpose Trust Fund. The fund would report

Accepted Answer

The donation of $1,000,000 is considered an addition to the Private-Purpose Trust Fund, as it is an external source of funding that increases the value of the fund. This addition would be reported on the statement of changes in fund balances for the fund as a whole.

Quiz 12: Trust and Agency Fiduciary Funds Summary of Interfund-Gca-Gltl Accounting