Deck 7: Fiduciary Funds, Interfund Transactions

Question 1

Assets held in by a government acting as agent for one or more other governmental units or for individuals or private organizations would be reported as private purpose trust funds.

Answer 1

False
Explanation: Assets held in by a government acting as agent for one or more other governmental units or for individuals or private organizations would be accounted for in an agency fund. Private purpose trust fund results when a contributor and a government agree that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments.

Question 2

The Fiduciary Funds are included in the Government-Wide Financial Statements.

Answer 2

False
Explanation: Fiduciary funds never appear in the government-wide statements.

Question 3

Fiduciary Funds are used to account for assets held by a government acting as a trustee or agent for entities external to the governmental unit: Including individuals, organizations, and other governmental units.

Answer 3

True
Explanation: Fiduciary Funds are used to account for assets held by a government acting as a trustee or agent for entities external to the governmental unit including individuals, organizations, and other governmental units.

Question 4

Fiduciary Fund activities report in terms of Revenues and Expenses.

Question 5

Unless use of an agency fund is mandated by law, by GASB standards, or by decision of the governing board of a government, an agency relationship may be accounted for within governmental and/or proprietary funds.

Question 6

The term "fiduciary funds" include agency, pension trust, investment trust, and private purpose trust funds.

Question 7

Fiduciary funds are reported only in the fund-basis financial statements.

Question 8

The categories on the Statement of Changes in Fiduciary Net Position are Additions and Deductions.

Question 9

The required financial statements for agency funds include a Statement of Fiduciary Net Position, and a Statement of Changes in Fiduciary Net Position.

Question 10

Agency funds report the excess of assets over liabilities as "Net Position".

Question 11

Fiduciary fund financial statements include the Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position, and Statement of Cash Flows.

Question 12

Fiduciary Funds are not included in the government-wide financial statements.

Question 13

Fiduciary funds use the current financial resource measurement focus.

Question 14

The Accrual Basis and Economic Resource Measurement Focus are used for Private-Purpose, Investment Trust and Pension Funds.

Question 15

Agency fund assets belong to the party or parties for which the government acts as agent.

Question 16

Agency fund assets are offset by liabilities equal in amount, so no fund equity exists.

Question 17

Fiduciary Fund activities report in terms of Additions and Deductions.

Question 18

Assets held in trust that are restricted to benefit the citizenry in general or in support of the reporting government's programs would be reported as permanent funds if nonexpendable.

Question 19

Donated resources that benefit individuals or private organizations are reported in a private-purpose trust fund.

Question 20

Fiduciary funds use the accrual basis of accounting.

Question 21

Escheat property, often collected by the state, is to be reported in the fund to which the property ultimately reverts.

Question 22

Property that has been abandoned or property whose owners cannot be found is turned over to the state government until the legal owners can be found is known as community property.

Question 23

Governments offering postemployment benefits to their retired employees must present two financial statements related to their plans: the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position, as well as additional required supplementary information.

Question 24

Investment pools invested from external parties are recorded in Investment Trust Funds.

Question 25

An endowment to provide scholarships would be reported in a Private-purpose Trust Fund.

Question 26

The purpose of a Statement of Fiduciary Net Position for a defined benefit pension plan is to enable the reader to determine whether the pension plan is sufficiently funded.

Question 27

The purpose of the Schedule of Changes in Net Pension Liability and Required Ratios part of the required supplementary information) is to enable the reader to determine whether the pension plan is sufficiently funded.

Question 28

Pension trust funds are required to present a ten-year Schedule of Changes in Net Pension Liability and Related Ratios as required supplementary information.

Question 29

Investment Trust Funds account for only the external portion of investment pools.

Question 30

Defined Benefit Pension Plans are required to pay retired employees an amount determined by formula, rather than the amount contributed to the plan.

Question 31

Agency funds report no revenues, expenses, or fund equity accounts.

Question 32

If a government has a locally administered pension plan for which it is trustee, the government would report the locally administered plan as a pension trust fund in the basic financial statements.

Question 33

The government-wide and proprietary fund's Statement of Net Position report the net pension liability as a liability.

Question 34

GASB Standards require that IRS 457 Deferred Compensation Plans, if administered by the governmental unit, be reported as pension trust funds.

Question 35

Property that reverts to government ownership upon the death of the owner because of a lack of identifiable heirs is termed Escheat Property.

Question 36

Governmental investments in equity securities that have a determinable fair value are to be reported at fair value and any unrealized gains and losses are to be reported separately from realized gains and losses in the governmental operating statements.

Question 37

Employers with defined contribution plans will report a pension liability if the required contribution has not been fully paid by year end.

Question 38

If a government has no potential liability for payment of special assessment debt in the event of default by the property owners, then an agency fund may be used to account for the proceeds of the special assessment.

Question 39

An investment trust fund is used to account for the internal portion of a multi-government investment pool, when the reporting government is trustee.

Question 40

An endowment that is for the benefit of individuals and not the government controlling the funds should be accounted for using a private-purpose trust fund.

Question 41

For governmental-type funds, Statement 53 reporting of derivatives) applies only to reporting at the government-wide level, not the fund-basis statements.

Question 42

Investments in a private-purpose trust fund should generally be reported at fair market value.

Question 43

Equity investments should be recorded at fair market value unless a government has sufficient investments in a company to apply the equity method.

Question 44

Fiduciary funds are used to account for assets held by a government acting as a trustee or agent for entities external to the governmental unit, including individuals, organizations, and other governmental units. For this reason, fiduciary funds are often identified in governmental financial reports as Trust and Agency Funds.

Question 45

GASB had issued a proposed standard that would more clearly define fiduciary activities and change the categories of fiduciary funds. Activities meeting the definition of fiduciary in nature but that lack a formal trust agreement will in the future be reported in a new category, custodial fund. Custodial funds would include many activities currently reported in agency funds as well as pass-through grants and other activities lacking trust agreements.

Question 46

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations, or other governments, an agency trust fund has been formed.

Question 47

Statement 53 reporting of derivatives) does not apply to proprietary funds.

Question 48

A private-purpose trust fund is created when the government is the sponsor of a multigovernment investment pool and accounts for the external portion of those trust assets.

Question 49

GASB requires that endowments report investments at fair value unless the investments are in real estate

Question 50

Investments in a pension trust fund should generally be reported using fair market value.

Question 51

If a derivative is effective in reducing a government's exposure to identifiable risks, the changes in the value of the derivative are reflected as deferred outflows or deferred inflows in the period that the value changes.

Question 52

Schedules are required for pension and other employee benefit) trust funds as Required Supplementary Information RSI).

Question 53

An agency fund is used when a contributor and a government agree that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments

Question 54

Internal investment pools, which account for investments of the reporting entity, are to be reported within the funds providing the resources, when preparing financial statements.

Question 55

Which of the following is not a fiduciary fund?

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

Question 56

Defined benefit plans may have unfunded actuarial liabilities, and defined contribution plans do not.

Question 57

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations, or other governments, a private-purpose trust has been formed.

Question 58

Agency funds are not included in the Statement of Changes in Net Position because they have no revenues additions) or expenses deductions).

Question 59

Defined contribution plans may have unfunded actuarial liabilities, and defined benefit plans do not.

Question 60

Fiduciary funds are separately stated in the government-wide financial statements.

Question 61

Which is true regarding the basis of accounting for fiduciary funds?

A) All four fiduciary fund types are accounted for using the same basis of accounting and measurement focus as governmental funds.
B) All four fiduciary fund types are accounted for using the same basis of accounting and measurement focus as proprietary funds.
C) Agency funds are accounted for using the same basis of accounting and measurement focus as governmental funds, trust funds are accounted for using the same basis of accounting and measurement focus as proprietary funds.
D) Trust funds are accounted for using the same basis of accounting and measurement focus as governmental funds, and agency funds are accounted for using the same basis of accounting and measurement focus as proprietary funds.

Question 62

The terms used for classification of items on the Statement of Changes in Fiduciary Net Position are:

A) Revenues and Expenses.
B) Additions and Deductions.
C) Revenues and Expenditures.
D) Contributions and Expenses.

Question 63

Which of the following is true regarding the financial statements of fiduciary funds?

A) Fiduciary funds' financial statements include the Statement of Fiduciary Net Position, the Statement of Changes in Fiduciary Net Position, and the Statement of Fiduciary Cash Flows.
B) Fiduciary funds are accounted for using the economic resources measurement focus and accrual basis of accounting.
C) Both of the above.
D) Neither of the above.

Question 64

Which of the following is true regarding fiduciary funds?

A) Fiduciary funds are not included in the government-wide financial statements.
B) Fiduciary funds include agency, pension and other employee benefit) trust, private-purpose trust, and investment trust funds.
C) Both of the above.
D) Neither of the above.

Question 65

In an agency fund, assets are equal to:

A) There are no assets in an Agency Fund
B) Liabilities + Net Position
C) Net Position
D) Liabilities

Question 66

A fund that is used to account for assets held by a government temporarily acting as agent for one or more other governments units or for individuals or private organizations is an):

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

Question 67

______ funds are created when individuals or organizations contribute resources with the agreement that principal and/or income will be used to benefit individuals or private organizations.

A) Agency
B) Investment trust
C) Private-purpose trust
D) Permanent

Question 68

Which of the following statements is not true regarding agency funds?

A) Agency funds use modified accrual accounting.
B) Agency funds report only assets and liabilities; no fund equities, revenues, or expenditures are recorded.
C) Agency funds are reported in the fiduciary funds Statement of Fiduciary Net Position.
D) None of the above; all are true.

Question 69

How are Fiduciary Funds presented in the Government-wide Financial Statements?

A) Combined with Internal Service Funds.
B) Combined with Business activities.
C) Combined with governmental activities.
D) None of the Above.

Question 70

A fund that exists when the government is the sponsor of a multigovernment investment pool and accounts for the external portion of the trust assets is an):

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

Question 71

______ funds are created when individuals or organizations contribute resources with the agreement that the income will be used to the citizenry or the government's programs.

A) Agency
B) Investment trust
C) Private-purpose trust
D) Permanent

Question 72

Which of the following is true regarding agency funds?

A) Agency funds report assets and liabilities, but not net position, revenues or expenses.
B) Agency funds are often used to account for property tax collections by county governments for other governments.
C) Both of the above.
D) Neither of the above.

Question 73

Which of the following is true regarding fiduciary funds?

A) Fiduciary funds use the economic resources measurement focus and accrual accounting.
B) Fiduciary funds include pension and other employee benefit) trust, investment trust, agency, and permanent funds.
C) Both of the above.
D) Neither of the above.

Question 74

Which type of pension plan most commonly results in an unfunded actuarial liability?

A) Defined benefit plan.
B) Defined contribution.
C) Both A and B.
D) Neither A or B.

Question 75

A fund that exists when a government is the trustee for a defined benefit pension plan, or a defined contribution pension plan is an):

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

Question 76

A fund that is the result of an agreement between a contributor and a government that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments is an):

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

Question 77

Which of the following statements is not correct with respect to Agency Funds?

A) Assets accounted for in an agency fund belong to the party or parties for which the government acts as agent.
B) Assets are offset by an equal amount of liabilities.
C) Assets and liabilities are recognized at the time the government becomes responsible for the assets.
D) Agency funds use modified accrual accounting.

Question 78

Which of the following is true regarding fiduciary funds?

A) Fiduciary funds are included in the fund basis statements but not in the government-wide.
B) Fiduciary funds are reported by fund type, not as major funds.
C) Both of the above.
D) Neither of the above.

Question 79

Which of the following is true regarding fiduciary funds?

A) Investment trust funds account for the internal portion of an investment pool, when a government is trustee for that pool.
B) Private-purpose trust funds account for resources that are administered by a government for the benefit of others, such as a fund held to distribute resources to local not-for-profit charities.
C) Both of the above.
D) Neither of the above.

Question 80

Which of the following is not an example of the function of an Agency Fund?

A) Payment of pension benefits to retired government employees
B) Collection of local government sales taxes by the state government
C) Collection of property taxes for the school district by an elected county government official.
D) Periodic distribution by the state government of county sales taxes