Ch 7 - Fiduciary

The City of Sycamore has investments in bonds. These bonds have an amortized cost of $1,996,000. At year end, the financial press reports a market value of $2,002,000 for these bonds. The original cost of the bonds was $1,992,000. The par value at maturity will be $2,000,000. The amount at which the investments would be reported is: A) $2,002,000 B) $2,000,000 C) $1,996,000 D) $1,992,000

A) $2,002,000

A fund that is used to account for assets held by a government acting as agent for one or more other governments units or for individuals or private organizations is a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

A) Agency fund

Which of the following statements is not correct with respect to Agency Funds? A) Agency funds use modified accrual accounting B) Assets accounted for in an agency fund belong to the party or parties for which the government acts as agent. C) Assets are offset by an equal amount of liabilities. D) Assets and liabilities are recognized at the time the government becomes responsible for the assets.

A) Agency funds use modified accrual accounting

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 Assets. D) None of the above; all are true.

A) Agency funds use modified accrual accounting.

Which is true regarding the basis of accounting for fiduciary funds? A) All are accounted for using the same basis of accounting and measurement focus as proprietary funds. B) 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. C) 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. D) All are accounted for using the same basis of accounting and measurement focus as governmental funds.

A) All are accounted for using the same basis of accounting and measurement focus as proprietary funds.

Governments that contribute to single employer and agent multiple-employer plans compute annual pension cost as the _________? A) Annual required contribution. B) Normal cost. C) Unfunded actuarial liability. D) Net pension obligation.

A) Annual required contribution.

Agency fund assets and liabilities are to be recognized : A) At the time the government becomes responsible for the assets. B) When they are available and measurable. C) Only in the government-wide financial statements. D) When the earnings process is complete and collection is reasonably assured.

A) At the time the government becomes responsible for the assets.

Which of the following statements is correct with respect to GASB Statement No. 53 which establishes reporting requirements for governments entering into derivative instruments? A) Changes in the value of hedge derivatives are reported in the Statement of Net Assets. B) If a derivative is an investment derivative, the changes in the value of the derivative are deferred and reported in the statement of net assets. C) Statement No. 53 does not apply to proprietary or fiduciary funds. D) Statement No. 53 applies to government financial statements prepared using the modified accrual basis of accounting.

A) Changes in the value of hedge derivatives are reported in the Statement of Net Assets.

Clinton County maintains an investment trust fund for the investments of governments within its borders. All the investments had determinable fair values. Which of the following is true regarding investment trust funds and investments in general? A) Clinton County would report the investments of the other governments at fair value in the investment trust funds. B) Clinton County would report its own investments at fair value in the investment trust funds. C) Both of the above. D) Neither of the above.

A) Clinton County would report the investments of the other governments at fair value in the investment trust funds.

Which type of pension plan is required to pay out a certain sum, generally based on a percentage of salary upon retirement and the number of years of service? A) Defined Benefit B) Defined Contribution C) Contributory D) Noncontributory

A) Defined Benefit

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.

A) Defined benefit plan.

Investment Trust Funds are restricted to: A) External investment pools. B) Open-end mutual funds. C) Debt securities. D) All the above.

A) External investment pools

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.

A) Fiduciary funds use the economic resources measurement focus and accrual accounting.

A county treasurer maintains an investment pool in which several different towns in the county hold investments. Where should the towns' investments be recorded? A) Investment Trust Fund. B) Agency Fund. C) Private-purpose Trust Fund. D) None of the above.

A) Investment Trust Fund.

Which of the following is true regarding accounting for investments by state and local governmental units? A) Investments in all securities with determinable fair values (including bonds held to maturity) are to be reported at fair value. B) Realized gains and losses are to be reported separately from unrealized gains and losses in the Statement of Changes in Fiduciary Net Assets. C) Both of the above. D) Neither A nor B above.

A) Investments in all securities with determinable fair values (including bonds held to maturity) are to be reported at fair value.

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

A) Payment of pension benefits to retired government employees

When a contributor and a government agree that the principal and/or income of trust assets are for the benefit of individuals, private organizations, or other governments, which fund is formed? A) Private-purpose trust. B) Agency. C) Investment trust. D) Pension trust.

A) Private-purpose trust.

The City of DeKalb contributes to three pension plans: (1) a statewide pension plan for nonuniformed personnel, (2) a locally administered plan for police officers, and (3) a locally administered plan for firefighters. The City is trustee for the plans for police officers and firefighters. Which of the following is true? A) The City would maintain trust funds for the police and fire plans but not the statewide plan. B) When making contributions from General Fund resources to the police and fire plans, the General Fund would debit Other Financing Sources-Transfers Out and the Pension Trust Fund would credit Transfers In. C) Both of the above. D) Neither of the above.

A) The City would maintain trust funds for the police and fire plans but not the statewide plan.

The operations of agency funds will be included in which of the following statements? A) The fiduciary funds Statement of Fiduciary Net Assets B) The Statement of Changes in Fiduciary Net Assets C) The Government-wide Financial Statements D) All of the above

A) The fiduciary funds Statement of Fiduciary Net Assets

According to GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, investments of internal investment pools are to be reported in: A) The funds providing the resources for the investments. B) An investment trust fund. C) An agency fund. D) Either A and B.

A) The funds providing the resources for the investments.

The tax agency fund of Orange County collected $7,000,000 for a school district, $3,000,000 for the county General Fund, and $5,000,000 for a municipality located in the County. County General Fund employees handle the collections, and a 2.5 percent collection fee is charged all units except the county. The total amount of revenue recognized by the county General Fund would be: A) $ 390,000. B) $3,300,000. C) $3,390,000. D) $15,300,000.

B) $3,300,000.

The terms used for classification of items on the Statement of Changes in Fiduciary Net Assets are: A) Revenues and Expenses. B) Additions and Deductions. C) Revenues and Expenditures. D) Contributions and Expenses.

B) Additions and Deductions.

A private-purpose trust fund where the principal is not expendable, normally it is called a/an: A) Donation. B) Endowment. C) Gift. D) Transfer.

B) Endowment.

Investments in a private-purpose trust fund should generally be reported using: A) Cost Basis. B) Fair Market Value. C) Equity Method. D) None of the above.

B) Fair Market Value.

GASB Statement No. 52 requires endowments with investment real estate to report those assets at: A) Historical cost B) Fair market value C) Historical cost net of related debt D) Market value net of related debt

B) Fair market value

Which of the following is true regarding the financial statements of fiduciary funds? A) Fiduciary funds' financial statements include the Statement of Fiduciary Net Assets, the Statement of Changes in Fiduciary Net Assets, 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.

B) Fiduciary funds are accounted for using the economic resources measurement focus and accrual basis of accounting.

Which of the following is not true regarding postemployment benefit plans other than pension plans? A) Most governments have operated on a pay-as-you-go basis, leaving such plans underfunded. B) GASB Statement No. 43, Financial Reporting for Postretirement Benefit Plans Other Than Pension Plans, requires that such plans be fully funded. C) Similar to pensions, governments are required to present two financial statements, the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets. D) Two schedules must be included as required supplementary information: the Schedule of Funding Progress and the Schedule of Employer Contributions.

B) GASB Statement No. 43, Financial Reporting for Postretirement Benefit Plans Other Than Pension Plans, requires that such plans be fully funded.

Which of the following statements is not correct with respect to GASB Statement No. 53 which establishes reporting requirements for governments entering into derivative instruments? 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) Statement No. 53 applies only to reporting at the government-wide level for derivatives held by governmental funds, not the fund-basis statements.

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.

111. When a government is the sponsor of a multi-government investment pool, the government should report the external portion of those trust assets in a(n): A) Pension Trust Fund. B) Investment Trust Fund. C) Private-Purpose Trust Fund. D) Agency Fund.

B) Investment Trust Fund

Which of the following funds is used to account for the external portion of investment pools? A) Special Revenue Fund B) Investment Trust Fund C) Enterprise Fund D) Private-purpose Trust Fund

B) Investment Trust Fund

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 a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

B) Private-Purpose Trust Fund

A ___________ is used when a contributor and a government agree that the principal and/or income of trust assets are for the benefit of individuals. A) Investment Trust. B) Private-Purpose Trust. C) Pension Trust. D) Employee Benefit Trust.

B) Private-Purpose Trust.

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.

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.

Escheat property is best described as which of the following? A) Property possessed by a local government, but whose use is restricted by a higher government. B) Property a government obtains and holds for the rightful owner in the absence of claimants or heirs. C) Property gifted to the government by private citizens. D) Property the government obtains via eminent domain.

B) Property a government obtains and holds for the rightful owner in the absence of claimants or heirs.

Where is the actuarial liability shown in a Comprehensive Annual Financial Report for a pension trust fund? A) The Statement of Fiduciary Net Assets. B) The Schedule of Funding Progress (RSI). C) The General Fund Balance Sheet only. D) The Government-wide Statement of Net Assets.

B) The Schedule of Funding Progress (RSI).

Which of the following is not true regarding pension accounting and reporting? A) Local governments include only the pension plans for which it is trustee in pension trust funds Statement of Fiduciary Net Assets. B) The pension trust fund Statement of Fiduciary Net Assets reflects the accrued actuarial liability (the excess of the projected benefit obligation over the net assets available for benefits). C) Pension investments are recorded at fair (market) value. D) None of the above; all are true.

B) The pension trust fund Statement of Fiduciary Net Assets reflects the accrued actuarial liability (the excess of the projected benefit obligation over the net assets available for benefits).

Agency Funds are not included in the Government-wide Financial Statements because: A) These Funds use the modified accrual basis of accounting. B) The resources are not available to the reporting unit. C) The government doesn't keep track of these types of funds. D) These funds do not have a material effect on the financial statements.

B) The resources are not available to the reporting unit.

Which of the following is true regarding pension (and other employee benefit) trust funds? A) The actuarially computed Pension Benefit Obligation is reported in the Statement of Fiduciary Net Assets. B) While full accrual accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Assets in lieu of "revenues" and "expenses." C) Both of the above. D) Neither of the above.

B) While full accrual accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Assets in lieu of "revenues" and "expenses."

James McHughes gave the following to the City of Carnesville in order to establish a private-purpose trust: o Land - cost, $500,000; fair market value as of the date of the gift, $400,000. o Securities - cost, $1,600,000; fair market value as of the date of the gift, $1,800,000. The amount to be recorded as additions for gifts by the private-purpose trust fund would be: A) $2,000,000. B) $2,100,000. C) $2,200,000. D) $2,300,000.

C) $2,200,000.

Fund equity will not be found in... A) Investment trust funds. B) Pension trust funds. C) Agency funds. D) Private-purpose trust funds.

C) Agency funds.

When accounting for other postemployment benefits, the OPEB obligation for employees of governmental activities is: A) Reported in the government-wide statements, but not the fund basis statements. B) The cumulative difference between the amount funded and the annual required contribution. C) Both A and B. D) Neither A nor B.

C) Both A and B.

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.

C) Both of the above

Which of the following is true regarding agency funds? A) Agency funds report assets and liabilities, but not net assets, 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.

C) Both of the above.

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.

C) Both of the above.

Which of the following is true regarding fiduciary funds? A) When a government is trustee for a defined benefit pension plan, two RSI schedules are required: a schedule of funding progress and a schedule of employer contributions. B) Escheat property proceeds must be reported in either a private-purpose trust fund or the fund to which the property ultimately escheats. C) Both of the above. D) Neither of the above.

C) Both of the above.

Which of the following is true regarding pension accounting and reporting for state and local governments? A) When the General Fund makes a contribution to a pension trust fund, the account "Expenditures" is debited. B) The Statement of Changes in Fiduciary Net Assets reports "additions" and "deductions," computed on the accrual basis. C) Both of the above. D) Neither of the above

C) Both of the above.

Which of the following is true regarding the reporting of investments by state and local governmental units? A) Investments, for which a determinable fair value can be obtained, are to be reported at fair value. B) Realized and unrealized gains and losses are to be combined in the relevant operating statement (for example, the Statement of Changes in Fiduciary Net Assets). C) Both of the above. D) Neither of the above.

C) Both of the above.

Which of the following statements about agency funds is true? A) An agency relationship that usually 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) GASB mandates that governments report special assessment resources in an agency fund only if the reporting government has no obligation to assume debt service on special assessment debt in the event property owners' default but merely perform the functions of billing and collecting the special assessments and paying interest and principal on the special assessment debt. C) Both of the above. D) Neither of the above.

C) Both of the above.

An employee enrolls in a pension plan that will pay out 3% of the employee's average salary for the last 3 years for each year of service that the employee worked. What type of pension plan does the employee have? A) Defined Contribution Plan. B) Normal Payout Plan. C) Defined Benefit Plan. D) None of the above.

C) Defined Benefit Plan.

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 a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

C) Investment Trust Fund

In an agency fund, assets are equal to: A) Liabilities + Net Assets B) Net Assets C) Liabilities D) There are no assets in an Agency Fund

C) Liabilities

Pension trust fund financial statements would be found in the Comprehensive Annual Financial Report of a governmental reporting entity: A) Only if the governmental unit desires to disclose the status of employee retirement plans to its employees. B) In all cases when the governmental unit has an obligation to provide funding for employee retirement. C) Only if the governmental unit is the trustee for the public employee retirement plan. D) Whenever governmental employees have a retirement plan, whether or not the governmental unit is obligated to provide funding.

C) Only if the governmental unit is the trustee for the public employee retirement plan.

An endowment to support scholarships would most likely be accounted for in which of the following fund types? A) Agency Fund. B) Investment Trust Fund. C) Private-Purpose Trust Fund. D) None of the Above.

C) Private-Purpose Trust Fund.

______ funds are created when individuals or organizations contribute resources with the agreement that principal and/or income will be used to benefit individuals or nongovernmental organizations. A) Agency B) Investment trust C) Private-purpose trust D) Permanent

C) Private-purpose trust

Which of the following is not a required supplementary information schedule for pension pensions? A) Schedule of funding progress B) Schedule of employer contributions C) Schedule of employee contributions D) None of the above, all of these are required.

C) Schedule of employee contributions

Which of the following statements is not required for pension trust funds? A) Statement of Fiduciary Net Assets. B) Statement of Changes in Fiduciary Net Assets. C) Statement of Fiduciary Cash Flows. D) None of the above; all three statements should be prepared for pension-trust funds.

C) Statement of Fiduciary Cash Flows.

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? 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.

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.

The "external portion" of an investment trust fund relates to... A) The portion of the investment that legally belongs to the sponsoring government. B) The portion of the investment that is allocated among the sponsoring government's funds. C) The portion of the investment that belongs to other participating governments. D) "External portion" relates only to agency funds, not investment trust funds.

C) The portion of the investment that belongs to other participating governments.

A statewide pension plan exists for all local governments in a certain state. The provisions of the plan indicate that each qualifying retiree receive 2% multiplied by the number of years active employment multiplied by the average salary for the past four years of service. The government calculates the actuarial liability on a statewide basis, not by individual government. The plan would be known as a (an): A) multiple-employer, defined benefit, agency plan. B) multiple-employer, defined contribution plan. C) multiple-employer, defined benefit, cost-sharing plan. D) Single employer plan.

C) multiple-employer, defined benefit, cost-sharing plan

The tax agency fund of Eden County collected $2,000,000 for the Eden School District, $1,000,000 for the Village of Edenton, $1,200,000 for the Eden Park District, and $700,000 for Eden County. County General Fund employees handle the collections, and a 3 percent collection fee is charged all units except the county. The amount to be remitted to the county General Fund would be: A) $126,000. B) $147,000. C) $747,000. D) $826,000.

D) $826,000.

Which of the follow schedules are required to be included in RSI of governments that provide pension trust funds and other post employment benefits: A) Schedule of Employer Contributions. B) Schedule of Funding Progress. C) Statement of Changes in Fiduciary Net Assets. D) A and B.

D) A and B.

What account should be credited in a pension trust fund to record employee contributions? A) Other Financing Sources B) Net Assets C) Pension Benefit Obligation D) Additions

D) Additions

Which of the Fiduciary Funds listed below is used to account for the assets held by a government acting as an agent for one or more other governmental units? A) Private-purpose Trust Fund. B) Permanent Fund. C) Pension Fund. D) Agency Fund.

D) Agency Fund.

A pension plan that is required to pay out only the amount that has been accumulated for each employee is a ________? A) Defined Benefit Plan. B) Private-Purpose Plan. C) Defined Withdrawal Plan. D) Defined Contribution Plan.

D) Defined Contribution Plan.

Which of the following statements regarding employer reporting of pension or other employee benefit trust funds is not correct? A) Contributions by the governmental funds are recorded as expenditures. B) Unfunded amounts are reported in the government-wide statements. C) Proprietary funds record an expense equivalent to the required contribution. D) Governmental funds report unfunded amounts as a fund liability.

D) Governmental funds report unfunded amounts as a fund liability.

GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, does not apply to which of the following investment types? A) External investment pools. B) Open-end mutual funds. C) Debt securities. D) Investments of pension funds.

D) Investments of pension funds.

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.

D) None of the Above.

A fund that exists when a government is the trustee for a defined benefit pension plan, or a defined contribution pension plan is a(n): A) Agency fund B) Private-Purpose Trust Fund C) Investment Trust Fund D) Pension Trust Fund

D) Pension Trust Fund

______ 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

D) Permanent

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.

D) Permanent Fund.

Jasper City is trustee for the Henry J. Moneybags Endowment Fund, created to provide scholarships for students. This is an example of which type of fund? A) Permanent. B) Pension trust. C) Agency. D) Private-purpose trust.

D) Private-purpose trust.

Financial reporting requirements for defined benefit pension plans include all of the following statements and schedules except? A) Schedule of Funding Progress. B) Statement of Changes in Plan Net Assets. C) Statement of Plan Net Assets. D) Schedule of Employee Contributions.

D) Schedule of Employee Contributions.

What is the correct journal entry for a Tax Agency Fund to record tax levies of other governments certified to it? A) Taxes Receivable - Current Revenues Control B) Taxes Receivable - Current Due from Other Governments C) Taxes Receivable Transfer Out D) Taxes Receivable for Other Governments Due to Other Governments

D) Taxes Receivable for Other Governments Due to Other Governments

When preparing financial statements, the internal portion of investment pools would be reported under which fund? A) Investment trust fund. B) Pension fund. C) General Fund. D) The fund(s) providing the resources.

D) The fund(s) providing the resources.

The City of Springfield has three pension plans: a locally administered police plan for which it is trustee, a statewide cost sharing plan, and a statewide agency plan. The City would include in its CAFR pension trust fund financial statements for: A) All three plans. B) The locally administered plan plus the statewide agency plan. C) Both statewide plans. D) The locally administered plan only.

D) The locally administered plan only.