Question 1

Fiduciary funds use the current financial resource measurement focus.

Accepted Answer

A) True 
 B)False

Question 2

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.

Accepted Answer

A) True 
 B)False

Question 3

Churchville County is trustee for a multi-government investment pool and has established an investment trust fund. Included in the investment trust fund, for management purposes, are investments in the amount of $15 million from the County's General Fund, $3 million from the County's special revenue funds, and $112 million from other governments. Which of the following would be true?

Accepted Answer

A)  The County would report $18 million in an investment trust fund. 
B)  The County would report the entire $130 million in an investment trust fund. 
C)  The County would report the $112 million in an investment trust fund, the $15 million in its General Fund, and the $3 million in special revenue funds. 
D)  The County would report the $112 million in an investment trust fund and the$18 million in a permanent fund.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Investments in a private-purpose trust fund should generally be reported using:

Accepted Answer

A)  Cost Basis. 
B)  Fair Market Value. 
C)  Equity Method. 
D)  None of the above.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

When accounting for pension benefits, the net pension obligation for employees of proprietary activities is:

Accepted Answer

A)  Reported in the government-wide statements. 
B)  Reported in the proprietary fund-basis statements. 
C)  Both A and B. 
D)  Neither A nor B.

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

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:

Accepted Answer

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

Question 10

Jasper City is trustee for the Henry J. Mooney Endowment Fund, created to provide scholarships for students. This is an example of which type of fund?

Accepted Answer

A)  Private-purpose trust. 
B)  Pension trust. 
C)  Agency. 
D)  Permanent trust.

Question 11

What account should be credited in a pension trust fund to record employee contributions?

Accepted Answer

A)  Net Position 
B)  Pension Benefit Obligation 
C)  Additions 
D)  Other Financing Sources

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about agency funds is true?

Accepted Answer

A)  An agency relationship that commonly results in the creation of an agency fund is the collection of taxes and other revenues by an official of one governmental unit for other governmental units. 
B)  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. 
C)  Both of the above. 
D)  Neither of the above.

Question 15

Which of the following is not a fiduciary fund?

Accepted Answer

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

Question 16

Fiduciary funds use the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

Which of the following statements is not correct with respect establishing reporting requirements for governments entering into derivative instruments according to GASB?

Accepted Answer

A)  Derivatives include swaps, options, forward contracts and future contracts. 
B)  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 investment gains or losses in the period that the value changes. 
C)  If a hedge derivative is deemed ineffective it is classified as investment purpose. 
D)  GASB statements apply only to reporting at the government-wide level for derivatives held by governmental funds, not the fund-basis statements.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true regarding fiduciary funds?

Accepted Answer

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.

Exam 7: Fiduciary Funds, Interfund Transactions

Fiduciary funds use the current financial resource measurement focus.

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.

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

Investments in a private-purpose trust fund should generally be reported using:

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

When accounting for pension benefits, the net pension obligation for employees of proprietary activities is:

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.

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:

Jasper City is trustee for the Henry J. Mooney Endowment Fund, created to provide scholarships for students. This is an example of which type of fund?

What account should be credited in a pension trust fund to record employee contributions?

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

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.

Which of the following statements about agency funds is true?

Which of the following is not a fiduciary fund?

Fiduciary funds use the accrual basis of accounting.

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

Which of the following statements is not correct with respect establishing reporting requirements for governments entering into derivative instruments according to GASB?

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

Which of the following is true regarding fiduciary funds?