Quiz
State & Local Govt - Fiduciary Activities
Questions in this quiz (28)
1Which of the following activities would most appropriately be recorded by an agency fund?
- AAssets held for college scholarships to be awarded to the children of police officers.
- BDeposits held for customers of a city-owned electric utility.
- CAssets held for special assessment debt repayment.
- DAssets held for investment, the earnings from which are used for maintenance of the City Cemetery.
2Which of the following grants received by a city would most appropriately be recorded in a "pass-through" agency fund?
- AA federal grant for which the ultimate allocation and use of the money will be decided by the state government. The city will serve as a conduit for the money between the state government and various not-for-profit organizations who will use the money.
- BA state grant to a local not-for-profit organization for summer employment of juveniles.
- CA federal grant made directly to a county for repairing and overhauling bridges.
- DA federal grant via the state government for which the city will be responsible for upgrading low-rent housing.
3Which basis of accounting best maintains the original principal of a trust?
- AAccrual basis.
- BCash basis.
- CModified accrual basis.
- DLegal basis.
4A statement of cash flows should be prepared for which of the following fiduciary fund types?
- AFiduciary funds do not provide a statement of cash flows.
- BAgency.
- CPension trust.
- DPrivate-purpose trust.
5Which of the following is the appropriate basis of accounting for an agency fund?
- ACash basis.
- BModified cash basis.
- CAccrual basis.
- DModified accrual basis.
6Fiduciary funds are accounted for in a manner similar to which of the following funds?
- APermanent funds.
- BSpecial revenue funds.
- CEnterprise funds.
- DDebt service funds.
7Under current GASB standards, how are other postemployment retirement benefits (OPEB) reported?
- ABy disclosing information about OPEB in the notes to the financial statements, but without display of OPEB expenses or liabilities on the face of the financial statements.
- BIn a manner that is quite similar to the reporting requirements for pension plans.
- CUsing two different methods, one for health care plans and a second for other types of OPEB.
- DBy using a modified accrual basis, which requires only expenditures of the current period be reported.
8Which of the following statements is true regarding termination benefits?
- AVoluntary termination benefits occur when employers provide an incentive to hasten an employee's voluntary termination of employment, such as a one-time payout.
- BVoluntary terminations relate to layoffs or reductions in workforce.
- CEmployers incur expenses related to voluntary terminations but not to involuntary terminations.
- DExpenses related to voluntary terminations may be avoided by hiring replacement employees within 60 days of the terminations.
9Billing and collection of special assessments and payment of debt principal and interest on special assessment debt for which the city is not obligated in any manner should be recorded in a(an):
- ADebt service fund.
- BSpecial assessment fund.
- CAgency fund and private-purpose trust fund.
- DAgency fund.
10If special assessment receivables are recorded in the accounts of an agency fund, the appropriate account(s) to credit is(are):
- AContributions to Net Position.
- BRevenues and Deferred Revenues.
- CDue to Special Assessment Bondholders.
- DInterfund Transfers In.
11Which of the following funds focuses on the measurement of economic resources using accrual accounting?
- AAgency.
- BPrivate-purpose trust.
- CPension trust.
- DAll of the statements are correct.
12Which of the following activities would likely be accounted for in a fiduciary fund?
- AA retirement plan for city employees.
- BThe city provides debt service for special assessment bonds for which the city assumes secondary responsibility for repayment.
- CAn endowed contribution is received for which earnings will be used to help maintain the city's parks.
- DAll of the statements are correct; that is, all of the activities would be accounted for in a fiduciary fund.
13Which of the following funds has no net position; that is, assets always equal liabilities?
- APrivate-purpose trust.
- BAgency.
- CPension trust.
- DInvestment trust fund.
14St. Bernard County levies and collects taxes for its own funds as well as several independent governments located within the county. State law permits the county to retain 1 percent of the amount of taxes collected for other governments to help defray the costs of tax administration. Which of the following would be recorded for collection fees retained by the county?
- AA debit by the Tax Agency Fund to Taxes Receivable.
- BA debit by the General Fund to Taxes Receivable.
- CA credit by the Tax Agency Fund to Revenues.
- DA credit by the General Fund to Revenues.
15When Stoddard County levies taxes for certain of its funds, as well as for several independent governments located within the county, its tax agency fund should:
- ACredit Revenues—Property Taxes.
- BCredit Estimated Uncollectible Current Taxes.
- CCredit Due to Other Funds and Governments.
- DBoth Credit Revenues—Property Taxes and Credit Estimated Uncollectible Current Taxes.
16The state government received $10,000,000 in federal grants that must be distributed to cities and towns for social services based on an assessment of community need. Which of the following fund types would the state government use to account for the receipt and transfer of these monies to local governments?
- AAgency.
- BSpecial revenue.
- CPrivate-purpose trust.
- DAny of the statements would be acceptable.
17An investment trust fund is used when:
- AThere are governments participating in the investment trust fund other than the government sponsoring the fund.
- BThe funds participating in the investment trust fund are part of the government sponsoring the fund.
- CBond covenants require that sinking funds of the sponsoring government be established.
- DAll of the statements are correct.
18Lincoln School District transferred U.S. Treasury bonds from investments held in its debt service fund to the Lincoln County Investment Pool. At the date of the transfer, the bonds had a fair market value of $1,040,000, but the carrying value in the School District's debt service fund was $1,000,000. The debt service fund of the School District would record the transfer of these securities to the investment pool with a:
- ADebit to Equity in Pooled Investments for $1,000,000.
- BCredit to Investments—U.S. Treasury Bonds for 1,040,000.
- CCredit to Revenues—Change in Fair Value of Investments for $40,000.
- DCredit to Investments—U.S. Treasury Bonds for $40,000.
19Using the information from the preceding question (question 8) how would the Lincoln County Investment Trust Fund record the receipt of U.S. Treasury bonds transferred to it by the School District's debt service fund? (Recall that at the date of transfer the fair value of the bonds was $1,040,000 and the carrying value was $1,000,000.)
- ACredit Additions—Deposits in Pooled Investments—Lincoln School District for $1,000,000.
- BCredit Additions—Deposits in Pooled Investments—Lincoln School District for $1,040,000.
- CDebit Investments—U.S. Treasury Bonds for $1,000,000.
- DBoth Credit Additions—Deposits in Pooled Investments—Lincoln School District for $1,040,000 and Debit Investments—U.S. Treasury Bonds for $1,000,000 are correct.
20The City of Ashland Investment Pool has three participants, X, Y, and Z. Their relative equities in the pool at a particular point in time were 45 percent, 30 percent, and 25 percent, respectively. At the end of the year, additional investment earnings were accrued in the investment pool in the amount of $100,000 and a report of the earnings was sent to participants X, Y, and Z. To record its share of the accrued interest, participant Y will:
- ADebit Interest Receivable for $30,000.
- BDebit Equity in Pooled Investments for $30,000.
- CCredit Revenues for $30,000.
- DBoth Debit Equity in Pooled Investments for $30,000 and Credit Revenues for $30,000 are correct.
21The City of Ashland Investment Pool has three participants, X, Y, and Z. Their relative equities in the pool at a particular point in time were 45 percent, 30 percent, and 25 percent, respectively. Near the end of the year, participant X withdrew $1,000,000 from the pool after which its share of the pool fell to 40 percent. Which of the following is a true statement after X made its withdrawal?
- AParticipant Y's equity in dollars is unchanged.
- BParticipant Y's percentage share of future investment earnings and changes in fair value of investments has increased.
- CParticipant Z's percentage share of future investment earnings and changes in fair value of investments has increased.
- DAll of the statements are correct.
22A local philanthropist gave the city government $1,000,000 which is to be permanently invested. Earnings, measured on the accrual basis, will be used to provide financial relief to the families of firefighters and police officers killed in the line of duty. The city should account for this endowment and its operation in a (an)
- AInvestment trust fund.
- BSpecial revenue fund.
- CA private-purpose trust fund.
- DA permanent fund.
23The financial position of the City Employee Retirement Fund administered by the city should be reported in the city's basic financial statements as a column in the:
- ABalance sheet—governmental funds.
- BStatement of fiduciary net position.
- CStatement of net position at the government-wide level.
- DBoth Statement of fiduciary net position and Statement of net position at the government-wide level.
24Employer contributions to a Public Employee Retirement System (PERS) should be reported as:
- AAn expenditure of the General Fund for employees paid by the General Fund.
- BAn expense of a proprietary fund for employees paid by a proprietary fund.
- CAn addition in the PERS.
- DAll of the statements are correct.
25Which of the following is part of the required supplementary information (RSI) for pension funds?
- ASchedule of employer contributions.
- BStatement of changes in plan net position.
- CSchedule of plan assets.
- DStatement of sources and uses of funds—all pension funds.
26Which of the following is a correct statement concerning the evaluation of a pension trust fund?
- AThe actuarial value of the plan assets reported on the pension's schedule of funding progress equals the fair value of the plan assets reported on the pension's statement of plan assets.
- BAn employer contribution that consistently equals the annual required contribution is generally an indication that the pension plan is being sufficiently funded.
- CA funded ratio (actuarial value of assets/actuarial accrued liability) of less than 100 percent indicates a financially troubled (unsound) pension plan.
- DAll of the statements are correct.
27At the government-wide level, the amount reported as pension expense each year should be the same as the:
- AAnnual pension cost.
- BNet pension obligation.
- CActual contribution made for the year.
- DAnnual required contribution.
28A sound investment strategy would:
- AProhibit investments in derivatives.
- BMaximize the portfolio return by investing general obligation bond proceeds in the highest yielding investments until such time as the bond proceeds are needed (e.g., to pay construction expenditures).
- CProvide a benchmark for total return on the portfolio.
- DAll of the statements are indications of a sound investment strategy.
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- Chapter 8
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- turquoise_cat
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- English
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