35) The GASB provides three criteria for determining if a fiduciary relationship exists. Which of
the following four is not one of the three criterion listed by the GASB?
A) The assets are controlled by the government.
B) The government is not to be involved in administrative decision-making concerning the fund
assets.
C) The assets related to the activity of the fund were not generated by the government’s exchange
or nonexchange revenues.
D) The government does not receive any benefit from the assets in the fund.
36) Which of the following activities would most appropriately be recorded by a trust fund?
A) Donations collected for improvements to the public library.
B) Deposits held for customers of a municipal-owned electric utility.
C) Assets held for investment, the earnings from which are used for maintenance of the City
Cemetery.
D) Assets held for college scholarships to be awarded to the children of police officers.
37) 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):
A) Debt service fund.
B) Special assessment fund.
C) Capital projects fund.
D) Custodial fund.
38) If special assessment receivables are recorded in the accounts of a custodial fund, the
appropriate account(s) to credit upon receipt of assessments from property owners will include:
A) Contributions to Net Position.
B) Revenues and Deferred Revenues.
C) Due to Special Assessment Bondholders—Principal.
D) Interfund Transfers In.
39) A city will serve as a conduit for federal grant money, which is sent to the city by the state
government and must be remitted to various not-for-profit organizations that will use the money.
The ultimate allocation of the money is decided by the state government. Which of the following
terms describes the nature of this grant?
A) Agency grant.
B) Fiduciary grant.
C) Pass-through grant.
D) Partial grant.
40) Which of the following activities would most appropriately be recorded by a custodial fund?
A) Donations collected for improvements to the public library.
B) Deposits held for customers of a municipal-owned electric utility.
C) Taxes collected by a county government on behalf of cities within the county.
D) Assets held for college scholarships to be awarded to the children of police officers.
41) Which of the following accounts is least likely to be used by a tax custodial fund?
A) Cash.
B) Revenues.
C) Taxes receivable for other funds.
D) Due to other governments.
42) When a cash and investment pool of a certain city was established, the debt service fund
transferred investments to the pool having a cost of $3,000,000 but a current fair market value of
$3,100,000. To record this transfer, a single journal entry was made by the debt service fund that
included which of the following?
A) A debit to Equity in Pooled Cash and Investments in the amount of $3,000,000.
B) A credit to Revenues—Change in Fair Value of Investments in the amount of $100,000.
C) A debit to Investments in the amount of $3,000,000.
D) A credit to Investments in the amount of $3,100,000.
43) When a cash and investment pool of a certain city was established, the debt service fund
transferred investments to the pool having a cost of $3,000,000 but a current fair market value of
$2,900,000. To record this transaction, a single journal entry was made by the debt service fund
that included which of the following?
A) A debit to Equity in Pooled Cash and Investments in the amount of $3,000,000.
B) A debit to Revenues—Change in Fair Value of Investments in the amount of $100,000.
C) A debit to Investments in the amount of $2,900,000.
D) A credit to Investments in the amount of $100,000.
44) 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?
A) Interfund Loans.
B) Revenues.
C) Undistributed Earnings on Pooled Investments.
D) Interfund Receivables.
45) 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?
A) Custodial funds.
B) Pension trust funds.
C) Investment trust funds.
D) Private-purpose trust funds.
46) Which of the statements concerning custodial funds is true?
A) Custodial funds use the same basis of accounting as permanent funds.
B) Custodial funds are reported only on the statement of fiduciary net position.
C) Custodial funds use the temporary accounts Additions and Deductions.
D) Custodial funds never receive cash.
47) Which of the following financial statements is prepared by fiduciary funds?
A) Statement of fiduciary net position.
B) Statement of fiduciary activities.
C) Statement of fiduciary cash flows.
D) All of these answers are correct.
48) At the government-wide level, where are fiduciary funds reported?
A) In the Governmental Activities column.
B) In the Business-type Activities column.
C) As an internal balance in the total column.
D) Fiduciary funds are not reported at the government-wide level.
49) An investment trust fund is used to report the net position available to the:
A) Sponsoring government only.
B) External participants only.
C) Financial institution that acts as custodian for the fund’s investments.
D) All of these answers are correct.
50) A 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:
A) An investment trust fund.
B) The General Fund.
C) A permanent fund.
D) Private-purpose trust fund.
51) An Olympic medalist swimmer who grew up in the city contributed $750,000 to the city
stipulating that the money be invested and that the earnings thereon be used for maintenance of the
swimming complex. The $750,000 would most appropriately be recorded in a(an):
A) Custodial fund.
B) Permanent fund.
C) Private-purpose trust fund.
D) Investment trust fund.
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52) A statement of cash flows should be prepared for which of the following fiduciary fund types?
A) Fiduciary funds do not provide a statement of cash flows.
B) Custodial.
C) Pension trust.
D) Private-purpose trust.
53) Which of the following is the appropriate basis of accounting for a custodial fund?
A) Cash basis.
B) Modified cash basis.
C) Accrual basis.
D) Modified accrual basis.
54) A donor contributed $500,000 to the city stipulating that the money be invested and that the
earnings thereon be used for maintenance of the a band shell in the city’s park. The $500,000
would most appropriately be recorded in a(an):
A) Custodial fund.
B) Private-purpose trust fund.
C) Endowment fund.
D) Permanent fund.
55) Fiduciary funds use a basis of accounting similar to which of the following funds?
A) Permanent funds.
B) Special revenue funds.
C) Enterprise funds.
D) Debt service funds.
56) Which of the following is the appropriate measurement focus for custodial funds?
A) Economic resources.
B) Current financial resources.
C) Cash and cash equivalents.
D) Accrual basis.
57) Which of the following activities would be recorded by a trust fund?
A) Deposits held for customers of a city-owned electric utility.
B) Assets passed-through the state government to the local government.
C) Assets held for special assessment bondholders for which the city has no liability.
D) Assets that are used to assist in the preservation of a private residence.
58) Depending on the characteristics of the fund, which of the following could be reported as a
trust fund or a custodial fund?
A) Investment fund.
B) Special assessment fund.
C) Other postemployment benefit fund.
D) Pass-through fund.
59) A government employer who makes contributions to pension plans for all employees:
A) Reports as part of pension expenditures in the governmental fund the amount paid.
B) Reports as part of pension expense of the proprietary fund the change in net pension liability.
C) Recognizes pension costs in the government-wide statements on the accrual basis of
accounting.
D) All of these are correct.