Deck 12: Trust and Agency Fiduciary Funds Summary of Interfund-Gca-Gltl Accounting

Question 1

The General Fund's share of its contribution to a Pension Trust Fund on behalf of the its employees would be reported by the General Fund as

A) A transfer out.
B) An other financing source.
C) An expenditure.
D) An other financing use.

Answer 1

C

Question 2

Record the following transactions and information for a government's Pension Trust Fund all amounts are in thousands of dollars.
Transactions all amounts are in thousands of dollars:
1. Employer contributions became due from the General Fund, $400, and an Enterprise Fund, $150. Equal employee contributions have been withheld from employee paychecks and also are due to the pension trust fund.
2. Ninety percent of the amounts due were collected from each fund.
3. Investments of $540 were purchased.
4. Interest received on investments of the fund during the year totaled, $380.
5. An employee resigned prior to retirement and withdrew $17 from the pension plan.
6. Retirement benefits of $92 were paid during the year. Additional current benefit payments of $4 were accrued but not paid by year end.
7. The present value of future benefits earned by active employees during the period is estimated to be $700.
8. The fair value of the pension plan investments increased by $83 during the year.
9. Prepare the closing entry for the year.
Requirements:
1. Prepare journal entries to record transactions in the City of LeConte Pension Fund accounts. If no entry is required, state "No entry required" and explain why.
2. Prepare the Statement of Changes in Fiduciary Net Position for the year ended December 31, 20X3. The Net Position - Restricted for Pension Benefits at January 1, 20X3 was $3,345.

Answer 2

Requirement #1
Requirement #2

Question 3

The City of Lucky received a $3,000 gift of cash. The donor stipulated that the principal of the gift must be maintained intact. Earnings of the trust may be used only to restore historic buildings. The buildings are owned and maintained by the local, not-for-profit historical society, which is not part of the city government entity. All amounts are in thousands of dollars.
Transactions:
1. Record the receipt of the gift on January 2, 20X3.
2. The city purchased investments for $2,800.
3. The city earned $200 in interest on some investments and sold investments that cost $750 for $700.
4. The city received bills from the historical society for $140 in repairs to historical buildings for the year. The city paid $125, with the balance to be repaid later.
5. By year-end the fair value of investments increased $300.
Requirements:
1. Prepare journal entries to record the transactions in a city's accounts. If no entry is required, state "No entry required" and explain why.
2. Prepare the Statement of Changes in Fund Net Position and Statement of Net Position for the year ended December 31, 20X3.

Answer 3

Requirement #1
Requirement #2
Requirement #3

Question 4

The principal of a Private-Purpose Trust Fund

A) Must be nonspendable in nature.
B) Must be spendable in nature.
C) Must never fall below a pre-determined threshold that is determined by generally accepted accounting principles.
D) May be spendable or nonspendable in nature.

Question 5

Shelby County collects property taxes levied by the county for its General Fund. It also collects the taxes levied by two towns within the county-Ford's Way and Foote's Corner. The county charges the towns a collection fee equal to 1% of taxes collected for those entities. Two percent of the property taxes have been uncollectible historically. All amounts are in thousands of dollars.
Transactions:
1. Taxes levied for 20X6 were $12,000 for the county, $5,000 for Ford's Way, and $3,000 for Foote's Corner.
2. During the year tax collections for the county totaled $9,000; $4,000 was collected for Ford's Way and $2,200 was collected for Foote's Corner.
3. One percent of the gross taxes receivable were written off as uncollectible during the year.
4. All cash collected, less the collection fee, was remitted to the appropriate fund or entity.
5. The collection fee was remitted to the appropriate fund or entity.
Requirement: Prepare the entries required in the Shelby County General Fund and in the Shelby County Tax Agency Fund to record the transactions. . If no entry is required, state "No entry required" and explain why.

Question 6

Which of the following activities would most likely be accounted for in an Agency Fund that would be reported in the external financial statements?

A) Tax collections by a county on behalf of local municipalities.
B) Interfund loan payments and disbursements.
C) A Federal pass-through grant.
D) Special assessments for debt on which the government is not obligated in any manner.

Question 7

Transactions all amounts are in thousands of dollars:
1. Employer contributions became due from the General Fund, $400, and an Enterprise Fund, $150 to Pension Trust Fund. Total payroll costs were $2,000 for the General Fund and $900 for the Enterprise Fund. Equal employee contributions are to be withheld from these payroll costs and paid to the Pension Trust Fund with the balance paid to the employees.
2. Ninety percent of the amounts due were collected from each fund.
3. A payment in lieu of taxes was made from an Enterprise Fund to the General Fund, $200. The payment was not for services.
4. A payment in lieu of taxes was made from an Enterprise Fund to the General Fund, $150. The payment was for services.
5. A vehicle purchased with General Fund resources 3 years ago for $30, was transferred to an Enterprise Fund. The city has a policy of depreciating all vehicles over a five year period, using the straight-line depreciation method, and no salvage value.
6. A vehicle purchased by an Enterprise Fund 2 years ago for $25, was transferred to the Parks and Recreation Department, accounted for in the General Fund. The city has a policy of depreciating all vehicles over a five year period, using the straight-line depreciation method, and no salvage value.
7. A Special Revenue Fund advanced $300 to an Internal Service Fund. The loan is to be repaid in 3 years.
8. When the City expanded the golf course a few years ago, the Enterprise Fund used to account for it issued $1,500 in long-term bonds. It has been determined that the golf course will be unable to generate sufficient revenues to repay the debt. Therefore, the debt was reclassified as general long-term liabilities and will be repaid with general government resources.
9. Building inspection services, accounted for in the General Fund, were billed to an Enterprise Fund, $100. The Enterprise Fund paid for the service.
10. Later, it was determined that half the inspection services should have been charged to an Internal Service Fund. The ISF paid the Enterprise Fund for the services provided by the General Fund.
Requirement: Prepare journal entries to the record transactions. If no entry is required, state "No entry required" and explain why.

Question 8

Pass-through grants are reported in an Agency Fund of the primary recipient

A) In all cases.
B) Unless the primary recipient holds the resources longer than one year prior before paying the subrecipients.
C) Only if the primary recipient has no direct financial involvement in the grant program.
D) Only if the primary recipient has no administrative or direct financial involvement in the grant program.

Question 9

The accounting parameters established by GASB Statement No. 25 do not apply to amounts reported in which of the following?

A) Schedule of funding progress.
B) Statement of changes in plan net position.
C) Statement of plan net position.
D) Statement of cash flows.

Question 10

An Agency Fund is used to account for debt service on special assessment bonds

A) That are not backed by the full faith and credit of the governmental unit.
B) That are not backed by the full faith and credit of the governmental unit unless the government guarantees the indebtedness.
C) On which the government is not obligated in any manner.
D) With terms exceeding 10 years.

Question 11

A government receives a donation of $300,000 to establish an endowment fund whose income is to be used to support scholarships for local high school students. The school district is not part of the government. The government should report this activity in which type of fund?

A) Permanent Fund
B) Private-Purpose Trust Fund
C) Investment Trust Fund
D) Agency Fund

Question 12

A Pension Trust Fund that is provided by a government solely for the benefit of its employees is known as a

A) Single-employer plan.
B) Cost-sharing plan.
C) Defined contribution plan.
D) Defined benefit plan.

Question 13

Generally accepted accounting principles require the use of an Investment Trust Fund

A) For governments that have any investment activity.
B) For governments that sponsor external investment pools.
C) For governments that are investing in investments that carry high risk.
D) For governments that pool their cash for investment purposes.

Question 14

A county provides health insurance coverage for retirees up until they reach the age of 65. This type of plan is known as

A) A simple pension plan.
B) A deferred compensation plan.
C) An other postemployment benefit plan.
D) A permanent plan.

Question 15

Even though each of the following funds involve a form of fiduciary responsibility, the fund that is not reported as a fiduciary fund for GAAP reporting purposes is a an

A) Investment Trust Fund.
B) Permanent Fund.
C) Private-purpose Trust Fund.
D) Pension Trust Fund.

Question 16

A Pension Trust Fund will be reported in the government-wide financial statements within

A) The governmental activities column.
B) The business-type activities column.
C) The discrete component unit presentations.
D) The Pension Trust Fund is not reported at the government-wide level.

Question 17

Which types of funds are classified as fiduciary funds?

A) Pension trust, private-purpose trust, and Investment Trust Funds.
B) Pension trust, permanent trust, and Agency Funds.
C) Pension trust, private-purpose trust, investment trust, and Agency Funds.
D) Expendable trust, nonexpendable trust, pension trust, and Investment Trust Funds.

Question 18

An other postemployment benefit plan where assets have been placed in trust would be reported as

A) A Permanent Fund.
B) An Agency Fund.
C) Part of the General Fund.
D) As a Pension and Other Employee Benefit Trust Fund.

Question 19

A county uses an agency fund to collect property taxes for both itself and on behalf of the three municipalities within its borders. If the county collected $7,000 of municipal taxes during the month, what would be reported in the agency fund?

A) Revenues of $7,000.
B) Revenues of $7,000, offset by expenses of $7,000.
C) An increase in equity in the agency fund of $7,000.
D) An increase in assets of $7,000 and an increase in liabilities of $7,000.

Question 20

A Scholarship Private-Purpose Trust Fund of a local school board pays tuition of $10,000 on behalf of scholarship recipients. What journal entry would be made to record this transaction in the trust fund?

Question 21

A Private-Purpose Trust Fund has investments totaling $1,500,000. As of the end of the fiscal year, the fair market value of these investments increased by $125,000 from the previous year. The Private-Purpose Trust Fund would

A) Report revenues of $125,000.
B) Report additions of $125,000.
C) Report a transfer of $125,000.
D) Not report any change until the investments are sold.

Question 22

If an Enterprise Fund transfers employer contributions to the Pension Trust Fund, which of the following best describes the effect of the transaction on each fund?

A) The Enterprise Fund will report expenses and the Pension Trust Fund will report revenues.
B) The Enterprise Fund will report deductions and the Pension Trust Fund will report additions.
C) The Enterprise Fund will report expenses and the Pension Trust Fund will report additions.
D) The Enterprise Fund will report expenditures and the Pension Trust Fund will report revenues.

Question 23

The General Fund transfers $75,000 of employer pension contributions to the Pension Trust Fund. The Pension Trust Fund should

A) Report revenues of $75,000.
B) Report transfers of $75,000.
C) Report expenses of $75,000.
D) Report additions of $75,000.

Question 24

A local citizen donated land to the city's Private-Purpose Trust Fund. The land has a fair market value of $50,000 but the donor's basis was $45,000. The trust fund will report

A) Additions of $50,000.
B) Additions of $45,000.
C) Capital contributions of $50,000.
D) Capital contributions of $45,000.

Question 25

The General Fund transfers $25,000 withheld from employee's gross pay during the last quarter to the Pension Trust Fund. Which of the following statements regarding this transaction is true?

A) The General Fund will reduce a liability and the Pension Trust Fund will record additions.
B) The General Fund will report expenditures and the Pension Trust Fund will record revenues.
C) The General Fund will report expenditures and the Pension Trust Fund will record additions.
D) The General Fund will reduce a liability and the Pension Trust Fund will record revenues.

Question 26

Which of the following statements are required for a Tax Agency Fund?

A) Statement of revenues, expenditures and changes in net position
B) Statement of revenues, expenses, and changes in net position
C) Statement of cash flows
D) Statement of changes in assets and liabilities.

Question 27

Which financial statements are required for a private purpose trust fund?

A) Statement of net position and statement of revenues, expenses and changes in net position.
B) Statement of net position, statement of revenues, expenses, and changes in retained earnings, and statement of cash flows.
C) Statement of net position and statement of changes in net position.
D) Statement of net position, statement of changes in net position, and statement of cash flows.

Question 28

Equity in a fiduciary fund is referred to as

A) Net position.
B) Fund balance.
C) Retained earnings.
D) Contributed Capital.

Question 29

Which of the following is not reported in the schedule of funding progress for a defined benefit pension plan?

A) Actuarial value of assets.
B) Actuarial accrued liability for future benefits.
C) Covered payroll.
D) Percentage of annual required contribution actually contributed.

Question 30

A government establishes an Investment Trust Fund. During the year, it receives $500,000 from other separate legal entities to invest. The Investment Trust Fund should report this activity in the statement of changes in net position as

A) Revenues.
B) Other financing sources.
C) Additions.
D) Should not be reported.

Question 31

At year end, a county tax agency fund's only asset was $500,000 in cash. The cash was collected on behalf of the following entities: County-$300,000
School district-$150,000
Fire district-$50,000
In the county basic financial statements, the tax Agency Fund should report what amount of assets and liabilities?

A) $200,000.
B) $300,000.
C) $450,000.
D) $500,000.

Question 32

A government receives a donation of $300,000 to establish a Private-Purpose Trust Fund. The donation should be reported as

A) Revenues.
B) Other financing sources.
C) Additions.
D) Special items.

Question 33

The municipalities for whom the county collects property taxes paid $5,000 in administrative fees to county to cover collection costs. The county will report

A) Revenues of $5,000 in the General Fund.
B) Revenues of $5,000 in the Agency Fund.
C) Other financing sources of $5,000 in the General Fund.
D) Other financing sources of $5,000 in the Agency Fund.

Question 34

Which of the following accounts would typically be reported in an agency fund?

A) Due to Other Governments.
B) Taxes Receivable.
C) Restricted Net Position.
D) Due from the General Fund.

Question 35

Which of the following are reported for a private-purpose trust fund?

A) Expenditures
B) Expenses
C) Deductions
D) Decreases to nonspendable fund balance.

Question 36

In a Tax Agency Fund, revenues must be recognized

A) When measurable and available.
B) On the cash basis.
C) At net realizable value of the taxes receivable.
D) Revenues are not reported for Agency Funds.

Question 37

Additions reported in the statement of changes in plan net position of a pension plan commonly include all of the following except

A) Actuarial gains from revision of actuarial assumptions.
B) Employer contributions.
C) Net appreciation in the fair value of investments.
D) Employee contributions.

Question 38

The local school board received a donation of $1,000,000 to establish a scholarship fund for graduating students. The scholarship is accounted for in a Private-Purpose Trust Fund. The fund would report

A) Additions of $1,000,000.
B) Revenues of $1,000,000.
C) A transfer of $1,000,000.
D) Capital contributions of $1,000,000.