For Agency Funds, assets are recorded as liabilities when received, and only recorded as income in the appropriate fund when release by the contributor.

Question

Quizplus · Accepted Answer

Agency Funds are held by an organization as a custodian or agent for someone else, and the assets transferred to the fund do not belong to the organization. Therefore, the assets are initially recorded as a liability until the release of those assets to the intended recipient by the contributor. Only then can they be recorded as income in the appropriate fund.

For Agency Funds, Assets Are Recorded as Liabilities When Received