M2 - Fiduciary Funds Financial Statements

Question 1

Changes in a government’s pension liability that result from changes in actuarial assumptions are accounted for as deferred outflows and deferred inflows. (true or false)

Answer 1

True

A reduction in the liability is a deferred inflow presented between liabilities and net position on the statement of net position.

Question 2

Since the general fund bears the cost of funding the pension plan, routine employer contributions from the general fund to a pension trust fund are expenditures to the general fund. (true or false)

Answer 2

true

Question 3

Deferred compensation plans, for other than proprietary fund employees, adopted under IRC Sec. 457 should be reported in a (an):

Answer 3

Pension (and other employee benefits) trust fund

Question 4

When the government is not obligated in any manner for the special assessment debt, it acts as custodian of the resources related to the special assessment. In this case what fund should be used to report the debt service transactions?

Answer 4

Agency fund

Agency funds are used to account for assets (such as taxes collected) held by a governmental unit (such as a county) acting as an agent for another governmental unit (such as a school district).

Question 5

An agency fund is custodial in nature. (true or false)

Answer 5

True. Transactions for which the governmental unit has no direct responsibility but simply is acting as an agent for a third party are recorded in the agency fund.

Question 6

Private Purpose Trust Fund

Answer 6

Escheat property held for individuals, private organizations, or another government should be reported in a private purpose trust fund, or in the governmental or proprietary fund in which otherwise reported.

Question 7

For an investment trust fund, what are the required F/S?

Answer 7

• Statement of fiduciary net position (balance sheet)

- Statement of changes in fiduciary position (income statement)

Question 8

Transactions between the fiduciary funds and governmental and proprietary funds are handled as if the fiduciary fund (in this case the pension fund) was administered by a separate trustee. (true or false)

Answer 8

True

Ex: if the city of Sequoia made contributions to the police pension fund during the year ended December 31, Year 1. The contribution would be recorded in the general fund as an expenditure.

Question 9

The private purpose trust fund is the designated fund for reporting all other trust arrangements under which principal and income are for the benefit of one of the following:

Answer 9

• Specific Individuals
• Private Organizations
• Other Governments

Ex: The water and sewer deposits are abandoned or escheat properties that are held on behalf of the State pending disposition by operation of law. This transaction meets the definition of a Private Purpose fund.

Question 10

Investment pools operated by a government that accounts for the investments of other entities would display those investments in an investment trust fund. (true or false)

Answer 10

True

The government’s own investments, invested in its own investment trust fund, would treat the trust fund as if it were an outside trustee. As a result, the government’s own investments would be treated as assets of the investing fund itself (just as if it were an external broker).

Question 11

True or False: Employers should disclose employer and employee obligations to contribute to the plan, a brief statement about the plan, and employee eligibility requirements.

Answer 11

True

Question 12

Journal entry for agency fund when receiving money into fund

Answer 12

DR: Cash
CR: Due to other funds - (whoever owed too)
CR: Dues to general fund (if charged fee for service)