Exam 8: Accounting for Fiduciary Activitiesagency and Trust Funds

On January 1,Forrester County is holding investments for Tinsel Town valued at $500,000 in an investment pool,accounted for in an investment trust fund.On January 1,Valley School District invests $1,500,000 in the pool.Earnings on pooled investments for the six months ended June 30 totaling $300,000 were received in cash. 1)What percentage interest in the pool is held by the town and the school district? 2)(a)Show the entry in the Investment Trust Fund to record the School District's investment in the pool. (b)Show the entry in the Investment Trust Fund to summarize the collection of interest for the six-month period. (c)Show the entry in the Investment Trust Fund to record the distribution of the interest earned on pooled investments,assuming that the interest will be reinvested by the town and school district.

Which of the following activities would most appropriately be recorded by an agency fund?

A defined benefit plan specifies the amount or rate of contribution that the employer and employees must contribute to benefit the members' accounts in the pension plan.

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 who 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?

GASB standards provide comprehensive guidance on pension accounting and financial reporting for defined benefit pension plan employers,but the FASB provides guidance for plan sponsors.

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 transaction,the journal entry made by the debt service fund will include:

Why do agency funds have no fund equity? What classes of accounts are reported in agency fund financial statements?

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

At the government-wide level,where are fiduciary funds reported?

In accounting practice,the legalistic distinctions between trust funds and agency funds are not of major significance.

An Olympic medalist swimmer who grew up in the city contributed $75,000 to the city stipulating that the money be invested and that the earnings thereon be used for maintenance of the swimming complex.The $75,000 would most appropriately be recorded in a(an):

A governmental employer who makes contributions to pension plans for all employees:

Agency funds should utilize the modified accrual basis of accounting.

Which of the following is the most reliable means of distinguishing a trust relationship from an agency relationship for purposes of deciding which type of fiduciary fund should be used?

When an investment pool is created,the assets of each fund entering the pool should be transferred to the pool at their fair value at the date of the transfer.

In regard to pass-through grants,a recipient government has administrative involvement if it is responsible for filing paperwork under a grant agreement.

Trust funds should utilize the accrual basis of accounting.

Fiduciary funds use a basis of accounting similar to which of the following funds?

Explain the purpose of the account "undistributed change in fair value of investments" used in a cash and investment pool.

Each of the following are reported as fiduciary funds except: