Amounts withheld for FICA and income taxes from earnings of employees of a governmental entity are displayed as a liability in a(n):

Question

Quizplus · Accepted Answer

Agency funds are used to account for situations where the government is acting as an agent for someone else, such as withholding taxes from employees' earnings. These amounts are held in trust until they are paid to the respective tax authorities, thus they are recorded as a liability in an agency fund.

Amounts Withheld for FICA and Income Taxes from Earnings of Employees