Exam 8: Accounting for Fiduciary Activities—Custodial and Trust Funds

Which of the statements concerning custodial funds is True?

Which of the following statements is True regarding termination benefits?

If special assessment receivables are recorded in the accounts of a custodial fund, the appropriate account(s) to credit upon receipt of assessments from property owners will include:

Kirby County established a tax custodial fund to collect property taxes for the City of Kix, the City of Denton, and Kirby County Independent School District. Total tax levies of the three governments were $200,000 for the year, of which $60,000 was for the City of Kix, $40,000 for Denton, and $100,000 for the School District. The tax custodial fund charges a 2% collection fee that it transfers to the General Fund of the County in order to cover costs incurred for custodial fund operations. During the year the tax custodial fund collected and remitted $150,000 of the $200,000 levies to the various governments. Collection fees associated with the $150,000 were remitted to Kirby County's General Fund prior to year end. For the Kirby County Tax Custodial Fund prepare the journal entries to record the taxes collected during the year and the remittances made to participating governments. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Which of these fiduciary fund types is allowed to aggregate its additions and deductions provided resources received are held for no more than three months?

Trust funds should utilize the accrual basis of accounting.

Which of the following statements is True regarding management of investments?

Earnings on pooled investments and changes in fair value of investments are allocated to the participants having an equity interest in the pool in proportion to their relative contributions to the pool.

When a cash and investment pool of a certain city was established, the debt service fund transferred investments to the pool having a cost of $3,000,000 but a current fair market value of $2,900,000. To record this transaction, a single journal entry was made by the debt service fund that included which of the following?

Which of the following statements regarding the financial reporting of custodial funds is not True?

When a cash and investment pool of a certain city was established, the debt service fund transferred investments to the pool having a cost of $3,000,000 but a current fair market value of $3,100,000. To record this transfer, a single journal entry was made by the debt service fund that included which of the following?

Select the key term that relate to accounting for pension plans from the list that best matches with the following definition. A. Agent multiple-employer pension plan B. Cost-sharing multiple-employer pension plan C. Covered payroll D. Defined benefit plan E. Defined contribution plan F. Net pension liability G. Service cost H. Total pension liability ________ 1. A pension plan which specifies the amount or rate of contribution that the employer and employees must contribute to the members' accounts in the pension plan. ________ 2. The portion of the present value of projected benefit payments to be provided through the pension plan to current active and inactive employees that is attributed to those employees' past periods of service. ________ 3. The portion of the actuarial present value of projected benefit payments that is attributed to the current year, interest on the total pension liability, benefit payments, and other changes to the total pension liability. ________ 4. The pension obligations of many employers are pooled and plan assets can be used to pay the benefits of the employees of any employer that provides pensions through the pension plan. ________ 5. Plan assets of numerous employers are pooled for investment purposes but accounts are maintained for the individual employer participants.

A statement of cash flows should be prepared for which of the following fiduciary fund types?

Billing and collection of special assessments and payment of debt principal and interest on special assessment debt for which the city is not obligated in any manner should be recorded in a(an):

Defined benefit pension plans are classified as either single-employer pension plans or multiple-employer pension plans.

An investment trust fund is used to report the net position available to the:

Pension trust funds should utilize budgetary accounts in the same manner as the General Fund and special revenue funds.

A city will serve as a conduit for federal grant money, which is sent to the city by the state government and must be remitted to various not-for-profit organizations that will use the money. The ultimate allocation of the money is decided by the state government. Which of the following terms describes the nature of this grant?

The Internal Revenue Service limits the amount of earnings a government can make when investing the proceeds from its general obligation bonded debt.

Depending on the characteristics of the fund, which of the following could be reported as a trust fund or a custodial fund?