Governmental Accounting Final
questions and correct answers.
Fiduciary funds ANS -Government holds as trustees or agents for individuals, private organizations, or
other governmental units.
Two categories of fiduciary funds ANS -Expendable and non expendable.
Permanent fund ANS -Nonexpendable resources that activities of the government itself. A
governmental fund.
What is one type of nonexpendable trust fund? ANS -An endowment.
Are fiduciary funds expendable or non expendable? ANS -They can be both.
How are permanent funds accounted for in government-wide statements? ANS -Governments must
report permanent fund investment earnings as specific program revenues if they are restricted to a
specific program. The GASB does not offer specific guidance about whether the earnings should be
recorded first in the permanent fund or the beneficiary fund.
What are the four major types of fiduciary funds? ANS -1. Pension (and other employee benefit) trust
funds.
2. Investment trust funds, pooled cash of multiple entities.
3. Private purpose trust funds, think scholarships and escheat property.
4. Agency funds, help in custodial capacity for others (brain dead fund).
Nonexpendable trust funds should be accounted for on what basis? ANS -GR: Full accrual.
Exception: Permanent funds. Per GASB, must be accounted for on modified accrual. Reasoning:
consistency with other governmental funds.
How are gains and losses reported in nonexpendable funds? ANS -GR: Policy or donor stipulation rules.
, How are gains and losses reported in expendable funds? ANS -Investment gains are available for
expenditure and investment losses decrease resources available for expenditure.
Defined contribution plans ANS -Employer defines the inputs (contributions) but not the outputs
(benefits paid to retirees).
Defined benefit plans ANS -Complex because the employer defines outputs (benefits paid) and is
required contribute a sufficient amount to pay the required benefits when its employees retire.
How are pension costs accounted for? ANS -Government-wide statements: report annual required
contribution (subject to certain criteria).
Fund statement: Portion of the pension cost to be liquidated with expendable available financial
resources.
How is the difference between the cumulative annual pension costs and the cumulative contributions
accounted for? ANS -GR: fund liability.
With regard to pension funds, what types of supplementary material are required? ANS -Actuarial data
in notes and supplementary schedules.
What is escheat property? ANS -Inactive bank accounts and property of deceased persons that are
temporarily help by the state until they are either claimed or revert back to the state.
Three major examples of private purpose trust funds? ANS -1. Funds used to account for escheat
property?
2. Scholarships to narrowly defined group of students.
3. Endowments held to benefit needy employees or their families.
Agency funds ANS -Resources held in custodial capacity (brain dead funds).
questions and correct answers.
Fiduciary funds ANS -Government holds as trustees or agents for individuals, private organizations, or
other governmental units.
Two categories of fiduciary funds ANS -Expendable and non expendable.
Permanent fund ANS -Nonexpendable resources that activities of the government itself. A
governmental fund.
What is one type of nonexpendable trust fund? ANS -An endowment.
Are fiduciary funds expendable or non expendable? ANS -They can be both.
How are permanent funds accounted for in government-wide statements? ANS -Governments must
report permanent fund investment earnings as specific program revenues if they are restricted to a
specific program. The GASB does not offer specific guidance about whether the earnings should be
recorded first in the permanent fund or the beneficiary fund.
What are the four major types of fiduciary funds? ANS -1. Pension (and other employee benefit) trust
funds.
2. Investment trust funds, pooled cash of multiple entities.
3. Private purpose trust funds, think scholarships and escheat property.
4. Agency funds, help in custodial capacity for others (brain dead fund).
Nonexpendable trust funds should be accounted for on what basis? ANS -GR: Full accrual.
Exception: Permanent funds. Per GASB, must be accounted for on modified accrual. Reasoning:
consistency with other governmental funds.
How are gains and losses reported in nonexpendable funds? ANS -GR: Policy or donor stipulation rules.
, How are gains and losses reported in expendable funds? ANS -Investment gains are available for
expenditure and investment losses decrease resources available for expenditure.
Defined contribution plans ANS -Employer defines the inputs (contributions) but not the outputs
(benefits paid to retirees).
Defined benefit plans ANS -Complex because the employer defines outputs (benefits paid) and is
required contribute a sufficient amount to pay the required benefits when its employees retire.
How are pension costs accounted for? ANS -Government-wide statements: report annual required
contribution (subject to certain criteria).
Fund statement: Portion of the pension cost to be liquidated with expendable available financial
resources.
How is the difference between the cumulative annual pension costs and the cumulative contributions
accounted for? ANS -GR: fund liability.
With regard to pension funds, what types of supplementary material are required? ANS -Actuarial data
in notes and supplementary schedules.
What is escheat property? ANS -Inactive bank accounts and property of deceased persons that are
temporarily help by the state until they are either claimed or revert back to the state.
Three major examples of private purpose trust funds? ANS -1. Funds used to account for escheat
property?
2. Scholarships to narrowly defined group of students.
3. Endowments held to benefit needy employees or their families.
Agency funds ANS -Resources held in custodial capacity (brain dead funds).
