Question 1

For governmental-type funds, Statement 53 reporting of derivatives applies only to reporting at the government-wide level, not the fund-basis statements.

Accepted Answer

GASB rules for reporting for derivatives applies to governmental financial statements prepared using the accrual basis of accounting, including government-wide statements, proprietary funds and fiduciary funds.

Question 2

Investments in a private-purpose trust fund should generally be reported at fair market value.

Accepted Answer

GASB standards require equity securities that have readily determinable fair values to be reported in the balance at fair value.

Question 3

Equity investments should be recorded at fair market value unless a government has sufficient investments in a company to apply the equity method.

Accepted Answer

GASB standards require equity securities that have readily determinable fair values to be reported in the balance at fair value. If a government has sufficient investments in a company to justify the equity method of accounting, then the equity method of accounting would be used.

Question 4

Fiduciary funds are used to account for assets held by a government acting as a trustee or agent for entities external to the governmental unit, including individuals, organizations, and other governmental units. For this reason, fiduciary funds are often identified in governmental financial reports as Trust and Agency Funds.

Accepted Answer

Fiduciary funds are often identified in governmental financial reports as Trust and Agency Funds because fiduciary funds are used to account for assets held by a government acting as a trustee or agent for entities external to the governmental unit, including individuals, organizations, and other governmental units.

Question 5

GASB had issued a proposed standard that would more clearly define fiduciary activities and change the categories of fiduciary funds. Activities meeting the definition of fiduciary in nature but that lack a formal trust agreement will in the future be reported in a new category, custodial fund. Custodial funds would include many activities currently reported in agency funds as well as pass-through grants and other activities lacking trust agreements.

Accepted Answer

GASB had issued a proposed standard that would more clearly define fiduciary activities and change the categories of fiduciary funds. Activities meeting the definition of fiduciary in nature but that lack a formal trust agreement will in the future be reported in a new category, custodial fund. Custodial funds would include many activities currently reported in agency funds as well as pass-through grants and other activities lacking trust agreements.

Question 6

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations, or other governments, an agency trust fund has been formed.

Accepted Answer

Private purpose trust fund results when a contributor and a government agree that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments.

Question 7

Statement 53 reporting of derivatives does not apply to proprietary funds.

Accepted Answer

GASB rules for reporting for derivatives applies to governmental financial statements prepared using the accrual basis of accounting, including government-wide statements, proprietary funds and fiduciary funds.

Question 8

A private-purpose trust fund is created when the government is the sponsor of a multigovernment investment pool and accounts for the external portion of those trust assets.

Accepted Answer

The government that manages the multi-government investment pool should report the external portion in an investment trust fund.

Question 9

GASB requires that endowments report investments at fair value unless the investments are in real estate

Accepted Answer

GASB requires that endowments report investments including real estate at fair value.

Question 10

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

Accepted Answer

GASB standards require equity securities that have readily determinable fair values to be reported in the balance at fair value.

Question 11

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

The deferred gains or losses typically are recorded as deferred outlfows or deferred inflows and continue to be reported this way until the hedged transaction occurs.

Question 12

Schedules are required for pension and other employee benefit trust funds as Required Supplementary Information RSI.

Accepted Answer

GASB standards require extensive note disclosures and RSI. Among the RSI schedules is a ten-year schedule displaying changes in the net pension liability and related ratios.

Question 13

An agency fund is used when a contributor and a government agree that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments

Accepted Answer

A Private-Purpose Trust Fund is 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.

Question 14

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

Sometimes governments place excess cash from multiple funds into a single investment pool. Internal investment pools are not separate funds and the resources continue to be reported by the funds providing the resources.

Question 15

Which of the following is not a fiduciary fund?

Accepted Answer

Fiduciary funds include agency, pension and other employee benefit) trust, private-purpose trust, and investment trust funds. Permanent funds are governmental funds.

Question 16

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

Accepted Answer

A defined benefit plan is one in which the plan is required to pay out a certain level of benefit based on a formula. The benefit is paid out regardless of the amount available in the plan. It is possible for the fund to have unfunded liabilities. A defined contribution plan provides an individual retirement account for each participating employee and no obligation exists for pension benefits beyond what has been accumulated in each individual's account.

Question 17

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations, or other governments, a private-purpose trust has been formed.

Accepted Answer

Private purpose trust fund results when a contributor and a government agree that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments.

Question 18

Agency funds are not included in the Statement of Changes in Net Position because they have no revenues additions or expenses deductions.

Accepted Answer

Agency funds are not included in the Statement of Changes in Net Position because they have no revenues additions or expenses deductions.

Question 19

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

Accepted Answer

A defined benefit plan is one in which the plan is required to pay out a certain level of benefit based on a formula. The benefit is paid out regardless of the amount available in the plan. It is possible for the fund to have unfunded liabilities. A defined contribution plan provides an individual retirement account for each participating employee and no obligation exists for pension benefits beyond what has been accumulated in each individual's account.

Question 20

Fiduciary funds are separately stated in the government-wide financial statements.

Accepted Answer

Fiduciary funds are not included in the government-wide statement because governments merely have custody, not ownership, of fiduciary resources.

Quiz 7: Fiduciary Funds, Interfund Transactions

For governmental-type funds, Statement 53 reporting of derivatives applies only to reporting at the government-wide level, not the fund-basis statements.

Investments in a private-purpose trust fund should generally be reported at fair market value.

Equity investments should be recorded at fair market value unless a government has sufficient investments in a company to apply the equity method.

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations, or other governments, an agency trust fund has been formed.

Statement 53 reporting of derivatives does not apply to proprietary funds.

A private-purpose trust fund is created when the government is the sponsor of a multigovernment investment pool and accounts for the external portion of those trust assets.

GASB requires that endowments report investments at fair value unless the investments are in real estate

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

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.

Schedules are required for pension and other employee benefit trust funds as Required Supplementary Information RSI.

An agency fund is used when a contributor and a government agree that the principal and/or income of trust assets is for the benefit of individuals, organizations, or other governments

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.

Which of the following is not a fiduciary fund?

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

When a contributor and a government agree that the principle and/or income of trust assets is for the benefit of individuals, organizations, or other governments, a private-purpose trust has been formed.

Agency funds are not included in the Statement of Changes in Net Position because they have no revenues additions or expenses deductions.

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

Fiduciary funds are separately stated in the government-wide financial statements.