Choose the best answer.

1. Which of the following is needed for a fiduciary relationship to exist?

a. The assets are controlled by outside entities.

b. The assets are derived from the reporting entity’s own revenues, which are used to benefit others.

c. The assets are for the benefit of individuals and/or entities that are not part of the reporting entity.

d. The assets are derived from a pass-through grant for which the reporting entity has administrative responsibility.

2. Which of the following could be considered a fiduciary fund?

a. External investment pool.

b. Permanent fund.

c. Private-purpose trust fund.

d. Both a and c.

3. Assuming a trust agreement exits, which of the following is an example of a trust fund?

a. A fund used to account for the collection and distribution of taxes to several local governments.

b. A student activity fund maintained for an organization affiliated with the local school district.

c. A fund used to account for gasoline taxes collected for road maintenance.

d. A fund used to collect resources and provide for the maintenance of the city’s parks and cemeteries.

4. Which of the following is prepared by fiduciary funds?

a. Statement of fiduciary net position.

b. Statement of fiduciary cash flows.

c. Statement of fiduciary activities.

d. All of the above.

5. Tax custodial funds

a. Are required to account for a government’s collection and remittance of federal and state payroll taxes.

b. Are used by a county’s assessor to compute the amount of taxes due on the properties contained within the county.

c. Are used to account for the collection and distribution of taxes when one government collects taxes for multiple funds and governments.

d. Are not allowed to charge for the services rendered to the various governmental funds and other governments.

6. An investment trust fund should be used when a trust agreement or equivalent arrangement exists and

a. A government manages investments primarily for multiple internal participants.

b. A government manages investments primarily for external entities.

c. A government receives an endowment from a citizen where only the income from the fund may be used to support a public library.

d. A government hires an outside investment manager.

7. The city has installed sidewalks using special assessment debt. Special assessments paid over the next 10 years will be used to retire the debt. If  property owners fail to pay the assessments, the city is under no obligation to pay the assessments. Debt service related to the special assessment debt used to install the sidewalks should be recorded in what fund type?

a. Private-purpose trust fund.

b. Debt service fund.

c. Custodial fund.

d. Capital projects fund.

8. At the government-wide level, where are fiduciary funds reported?

a. As an internal balance in the total columns.

b. The Governmental Activities column of the government-wide statements.

c. The Business-type Activities column of the government-wide statements.

d. Fiduciary funds are not reported at the government-wide level.

9. Fiduciary funds

a. Are accounted for using the accrual basis of accounting.

b. Include trust, custodial, and permanent funds.

c. Are not included in a government’s CAFR because they account for assets not owned by the government.

d. Provide information on assets belonging to both internal and external fund participants.

10. Colby City has a single pension plan for its employees, all of whose salaries and wages are paid from the General Fund. Ordinarily, the city’s General Fund should report an expenditure for its annual pension cost related to a defined benefit pension plan in an amount equal to the

a. Actual amount contributed to the plan.

b. Value of current year benefits.

c. Net annual change in amounts normally expected to be liquidated with expendable available financial resources.

d. Both a and c.

11. When the defined benefit pension obligations of several employers are combined and the accounts of the employees of each employer are separately maintained, the plan is classified as

a. A single-employer pension plan.

b. A multiple-employer benefit-sharing pension plan.

c. An agent multiple-employer pension plan.

d. A cost-sharing multiple-employer pension plan.

12. An investment trust fund would report in the financial statements the net position available to which of the following trust fund participants?

a. The administering government only.

b. The external participants only.

c. Only those external participants with material amounts of investment trust assets.

d. Both the administering government and the external participants.

13. If a state incurs the cost of monitoring grant recipients, which of the following funds would most likely account for the pass-through grant funds provided to local governments?

a. Private-purpose trust fund.

b. Custodial fund.

c. General Fund.

d. Special revenue fund.

14. Which pension fund financial statement or schedule would provide information on the percentage of the total pension liability that is funded?

a. Schedule of Changes in Net Pension Liability and Related Ratios.

b. Statement of Fiduciary Net Position.

c. Statement of Changes in Fiduciary Net Position.

d. Schedule of Contributions.

15. Which of the following statements concerning OPEB is incorrect?

a. Reporting of OPEB is similar to pension fund reporting.

b. Reporting of OPEB would include retiree health benefits.

c. OPEB costs are generally smaller than pension costs.

d. Similar to pension trust funds, OPEB funds are frequently state administered.