Agency funds are used only if a government holds resources in a purely custodial capacity for others.

Question

Quizplus · Accepted Answer

This is correct. Agency funds are used for funds held by a government in a purely custodial capacity for others, such as taxes collected by a city and held in trust for a school district. The government does not have a direct interest in these funds and is simply holding them on behalf of others.

Agency Funds Are Used Only If a Government Holds Resources