In the current year, Loma City earned $24,000 on the principal of a private-purpose trust fund but disbursed only $20,000.
-During the current year the private-purpose trust fund will recognize, related to earnings:
A) $24,000 revenues.
B) $20,000 revenues.
C) $24,000 addition to net position.
D) $20,000 addition to net position.

Question

Quizplus · Accepted Answer

Private-purpose trust funds recognize earnings as additions to net position rather than as revenues, so the correct answer is the amount that corresponds to earnings, which is $24,000.

In the Current Year, Loma City Earned $24,000 on the Principal