Chapter 8

Term
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Which of these fiduciary fund types is allowed to aggregate its additions and deductions provided resources received are held for no more than three months?

- Custodial funds.
- Pension trust funds.
- Investment trust funds.
- Private-purpose trust funds.
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Terms in this set (26)
Which of these fiduciary fund types is allowed to aggregate its additions and deductions provided resources received are held for no more than three months?

- Custodial funds.
- Pension trust funds.
- Investment trust funds.
- Private-purpose trust funds.
Custodial funds.
Which of the following activities would most appropriately be recorded by a trust fund?

- Donations collected for improvements to the public library.
- Deposits held for customers of a municipal-owned electric utility.
- Assets held for investment, the earnings from which are used for maintenance of the City Cemetery.
- Assets held for college scholarships to be awarded to the children of city employees.
Assets held for college scholarships to be awarded to the children of city employees.
Employer contributions of $600,000 to the pension fund would be recorded using which of the following?

- A debit to Additions—Employer Contributions.
- A debit to Deductions—Employer Contributions.
- A debit to Cash.
- A debit to Contributions Receivable.
A debit to cash
Custodial funds are used only if a government holds resources in a custodial capacity for others.

True or False
True
Most investment trust funds distribute investment earnings and changes in investment values on a daily basis.

True or False
False
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.

True or False
False
By definition a fiduciary fund that does not meet the definition of a trust fund is a custodial fund.

True or False
True
Which of the following activities would be recorded by a trust fund?

- Deposits held for customers of a city-owned electric utility.
- Assets passed-through the state government to the local government.
- Assets held for special assessment bondholders for which the city has no liability.
- Assets that are used to assist in the preservation of a historical private residence.
Assets that are used to assist in the preservation of a historical private residence.
In financial reporting for proprietary funds and at the government-wide level, the employer's pension expense for the period is equal to:

- The employer's contribution.
- Annual required contribution.
- The change in the net pension liability adjusted for various factors including amortization of amounts related to changes in pension assumptions and differences between projected and actual earnings.
- All of these are correct.
The change in the net pension liability adjusted for various factors including amortization of amounts related to changes in pension assumptions and differences between projected and actual earnings.
Fiduciary funds use a basis of accounting similar to which of the following funds?

- Permanent funds.
- Special revenue funds.
- Enterprise funds.
- Debt service funds.
Enterprise funds.
The cash and investment pool of Lake City allocates dividends, interest, and capital gains and losses on a periodic basis. When the cash and investment pool accrues interest earned on investments in debt securities, pending allocation to participating funds, it would credit which of the following accounts? - Interfund Loans. - Revenues. - Undistributed Earnings on Pooled Investments. - Interfund Receivables.Undistributed Earnings on Pooled Investments.In pension accounting, the employer's net pension liability: - Is measured as the total pension liability less the amount of fiduciary net position held for future pension payments. - Represents the portion of the present value of projected benefit payments to be provided through the pension plan to current active and inactive employees that is attributed to those employees' past periods of service. - Is the same as the net pension obligation. - Is based on actuarial valuations generally required to be performed at least every five years.Is measured as the total pension liability less the amount of fiduciary net position held for future pension payments.On the statement of changes in fiduciary net position, custodial funds need to display on separate lines each type of addition made to the fund. True or FalseFalseA government employer who makes contributions to pension plans for all employees: - Reports as part of pension expenditures in the governmental fund the amount paid. - Reports as part of pension expense of the proprietary fund the change in net pension liability. - Recognizes pension costs in the government-wide statements on the accrual basis of accounting. - All of these are correct.All of these are correct.Custodial funds should utilize the modified accrual basis of accounting. True or FalseFalseA local civic group gave the county government $25,000 cash to be used to pay the utility bills of persons with income below the poverty level. The city should account for the $25,000 contribution in what type of fund? - An investment trust fund. - The General Fund. - A permanent fund. - Private-purpose trust fund.Private-purpose trust fund.Pension trust funds should utilize budgetary accounts in the same manner as the General Fund and special revenue funds. True or FalseFalseWhich of the statements concerning custodial funds is true? - Custodial funds use the same basis of accounting as permanent funds. - Custodial funds are reported only on the statement of fiduciary net position. - Custodial funds use the temporary accounts Additions and Deductions. - Custodial funds never receive cash.Custodial funds use the temporary accounts Additions and Deductions.Defined benefit pension plans are classified as either single-employer pension plans or multiple-employer pension plans. True or FalseTrueThe collection of taxes or other revenues by one government for several of the funds it operates and for other governments often results in the creation of a trust fund. True or FalseFalseA common example of a private-purpose trust fund is a state-sponsored 529 savings plan. These plans allow parents to make after-tax contributions to a state government managed investment fund for their child's future education. True or FalseTrueBecause a government does not have any administrative decision-making responsibility, a custodial fund would not prepare a statement of net position. True or FalseFalseWhich of the following statements regarding the financial reporting of custodial funds is not true? - Custodial activities are reported only in the fiduciary fund financial statements. - Custodial fund financial information is reported in a separate column of the government-wide statement of activities. - Custodial funds are included in the statement of changes in fiduciary net position. - GASB standards allow reporting on individual custodial funds in a government's combining fiduciary fund financial statements.Custodial fund financial information is reported in a separate column of the government-wide statement of activities.When one participant in an investment pool withdraws part of its equity from the pool, that participant's proportionate interest is decreased and all other participants' proportionate interests are increased. True or FalseTrueA single-employer defined benefit plan prepares a number of schedules as required supplementary material under GASB standards. Which of the following is not a required schedule? - A 10-year schedule of changes in pension liability. - A 10-year schedule of active and retired plan participants. - A 10-year schedule of rate of return on pension plan investments. - A 10-year schedule of employer contributions, based on the actuarially determined contribution for employer and nonemployer contributing entities.A 10-year schedule of active and retired plan participants.A pension plan made $150,000 in payments to retirees. This would have been recorded using which of the following? - A credit to Deductions—Annuity Benefits. - A debit to Deductions—Annuity Benefits. - A credit to Due to Beneficiaries. - A debit to Expenditures—Annuity Benefits.A debit to Deductions—Annuity Benefits.