State & Local Govt - Fiduciary Activities

Description

Chapter 8
turquoise_cat
Quiz by turquoise_cat, updated more than 1 year ago
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Created by turquoise_cat over 8 years ago
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Resource summary

Question 1

Question
Which of the following activities would most appropriately be recorded by an agency fund?
Answer
  • Assets held for college scholarships to be awarded to the children of police officers.
  • Deposits held for customers of a city-owned electric utility.
  • Assets held for special assessment debt repayment.
  • Assets held for investment, the earnings from which are used for maintenance of the City Cemetery.

Question 2

Question
Which of the following grants received by a city would most appropriately be recorded in a "pass-through" agency fund?
Answer
  • A 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.
  • A state grant to a local not-for-profit organization for summer employment of juveniles.
  • A federal grant made directly to a county for repairing and overhauling bridges.
  • A federal grant via the state government for which the city will be responsible for upgrading low-rent housing.

Question 3

Question
Which basis of accounting best maintains the original principal of a trust?
Answer
  • Accrual basis.
  • Cash basis.
  • Modified accrual basis.
  • Legal basis.

Question 4

Question
A statement of cash flows should be prepared for which of the following fiduciary fund types?
Answer
  • Fiduciary funds do not provide a statement of cash flows.
  • Agency.
  • Pension trust.
  • Private-purpose trust.

Question 5

Question
Which of the following is the appropriate basis of accounting for an agency fund?
Answer
  • Cash basis.
  • Modified cash basis.
  • Accrual basis.
  • Modified accrual basis.

Question 6

Question
Fiduciary funds are accounted for in a manner similar to which of the following funds?
Answer
  • Permanent funds.
  • Special revenue funds.
  • Enterprise funds.
  • Debt service funds.

Question 7

Question
Under current GASB standards, how are other postemployment retirement benefits (OPEB) reported?
Answer
  • By 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.
  • In a manner that is quite similar to the reporting requirements for pension plans.
  • Using two different methods, one for health care plans and a second for other types of OPEB.
  • By using a modified accrual basis, which requires only expenditures of the current period be reported.

Question 8

Question
Which of the following statements is true regarding termination benefits?
Answer
  • Voluntary termination benefits occur when employers provide an incentive to hasten an employee's voluntary termination of employment, such as a one-time payout.
  • Voluntary terminations relate to layoffs or reductions in workforce.
  • Employers incur expenses related to voluntary terminations but not to involuntary terminations.
  • Expenses related to voluntary terminations may be avoided by hiring replacement employees within 60 days of the terminations.

Question 9

Question
Billing 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):
Answer
  • Debt service fund.
  • Special assessment fund.
  • Agency fund and private-purpose trust fund.
  • Agency fund.

Question 10

Question
If special assessment receivables are recorded in the accounts of an agency fund, the appropriate account(s) to credit is(are):
Answer
  • Contributions to Net Position.
  • Revenues and Deferred Revenues.
  • Due to Special Assessment Bondholders.
  • Interfund Transfers In.

Question 11

Question
Which of the following funds focuses on the measurement of economic resources using accrual accounting?
Answer
  • Agency.
  • Private-purpose trust.
  • Pension trust.
  • All of the statements are correct.

Question 12

Question
Which of the following activities would likely be accounted for in a fiduciary fund?
Answer
  • A retirement plan for city employees.
  • The city provides debt service for special assessment bonds for which the city assumes secondary responsibility for repayment.
  • An endowed contribution is received for which earnings will be used to help maintain the city's parks.
  • All of the statements are correct; that is, all of the activities would be accounted for in a fiduciary fund.

Question 13

Question
Which of the following funds has no net position; that is, assets always equal liabilities?
Answer
  • Private-purpose trust.
  • Agency.
  • Pension trust.
  • Investment trust fund.

Question 14

Question
St. 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?
Answer
  • A debit by the Tax Agency Fund to Taxes Receivable.
  • A debit by the General Fund to Taxes Receivable.
  • A credit by the Tax Agency Fund to Revenues.
  • A credit by the General Fund to Revenues.

Question 15

Question
When 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:
Answer
  • Credit Revenues—Property Taxes.
  • Credit Estimated Uncollectible Current Taxes.
  • Credit Due to Other Funds and Governments.
  • Both Credit Revenues—Property Taxes and Credit Estimated Uncollectible Current Taxes.

Question 16

Question
The 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?
Answer
  • Agency.
  • Special revenue.
  • Private-purpose trust.
  • Any of the statements would be acceptable.

Question 17

Question
An investment trust fund is used when:
Answer
  • There are governments participating in the investment trust fund other than the government sponsoring the fund.
  • The funds participating in the investment trust fund are part of the government sponsoring the fund.
  • Bond covenants require that sinking funds of the sponsoring government be established.
  • All of the statements are correct.

Question 18

Question
Lincoln 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:
Answer
  • Debit to Equity in Pooled Investments for $1,000,000.
  • Credit to Investments—U.S. Treasury Bonds for 1,040,000.
  • Credit to Revenues—Change in Fair Value of Investments for $40,000.
  • Credit to Investments—U.S. Treasury Bonds for $40,000.

Question 19

Question
Using 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.)
Answer
  • Credit Additions—Deposits in Pooled Investments—Lincoln School District for $1,000,000.
  • Credit Additions—Deposits in Pooled Investments—Lincoln School District for $1,040,000.
  • Debit Investments—U.S. Treasury Bonds for $1,000,000.
  • Both 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.

Question 20

Question
The 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:
Answer
  • Debit Interest Receivable for $30,000.
  • Debit Equity in Pooled Investments for $30,000.
  • Credit Revenues for $30,000.
  • Both Debit Equity in Pooled Investments for $30,000 and Credit Revenues for $30,000 are correct.

Question 21

Question
The 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?
Answer
  • Participant Y's equity in dollars is unchanged.
  • Participant Y's percentage share of future investment earnings and changes in fair value of investments has increased.
  • Participant Z's percentage share of future investment earnings and changes in fair value of investments has increased.
  • All of the statements are correct.

Question 22

Question
A 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)
Answer
  • Investment trust fund.
  • Special revenue fund.
  • A private-purpose trust fund.
  • A permanent fund.

Question 23

Question
The 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:
Answer
  • Balance sheet—governmental funds.
  • Statement of fiduciary net position.
  • Statement of net position at the government-wide level.
  • Both Statement of fiduciary net position and Statement of net position at the government-wide level.

Question 24

Question
Employer contributions to a Public Employee Retirement System (PERS) should be reported as:
Answer
  • An expenditure of the General Fund for employees paid by the General Fund.
  • An expense of a proprietary fund for employees paid by a proprietary fund.
  • An addition in the PERS.
  • All of the statements are correct.

Question 25

Question
Which of the following is part of the required supplementary information (RSI) for pension funds?
Answer
  • Schedule of employer contributions.
  • Statement of changes in plan net position.
  • Schedule of plan assets.
  • Statement of sources and uses of funds—all pension funds.

Question 26

Question
Which of the following is a correct statement concerning the evaluation of a pension trust fund?
Answer
  • The 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.
  • An employer contribution that consistently equals the annual required contribution is generally an indication that the pension plan is being sufficiently funded.
  • A funded ratio (actuarial value of assets/actuarial accrued liability) of less than 100 percent indicates a financially troubled (unsound) pension plan.
  • All of the statements are correct.

Question 27

Question
At the government-wide level, the amount reported as pension expense each year should be the same as the:
Answer
  • Annual pension cost.
  • Net pension obligation.
  • Actual contribution made for the year.
  • Annual required contribution.

Question 28

Question
A sound investment strategy would:
Answer
  • Prohibit investments in derivatives.
  • Maximize 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).
  • Provide a benchmark for total return on the portfolio.
  • All of the statements are indications of a sound investment strategy.
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