When an Investment Trust Fund makes an unsolicited distribution to a government that is participating in an investment pool, which account should be debited?

Question

Quizplus · Accepted Answer

Deductions-not expenditure or expenses-are accounted for in Investment Trust Funds. Although the amount received from pool participants will eventually have to be repaid to them (assuming no losses occur), a payable is not recorded. GASB Statement No. 84, paragraph 21, explains that a liability is reported in fiduciary funds when an event occurs that compels a government to disburse fiduciary resources. An event could be a demand being made for the resources or simply when no further action, approval, or condition is required to be taken or met by the beneficiary to release the assets.

When an Investment Trust Fund Makes an Unsolicited Distribution to a Government