Consider each of the following situations. Indicate whether (and why or why not) you think that the governement should account for the transactions and resources in an agency fund, a governmental fund, or other type of fiduciary fund. Not all the situations have been explicity addressed in the text. Therfore, you may have to generalize from those that have been disscussed.

1) A city extended sewer and water lines to a recently annexed community. Per agreement with the community, the improvements are to be paid for entirely by local residents, to finacne the improvements, the city issued 10 yewar notes on behalf of the residents. it assedssed the resident for the amount of the debt, plus intrest. The city guaranteed the notes and agreed to collect the assessments from the residents and make appropriate payments to the note holders. Howerver, the city's role is primarly one of intermediary. The residents, not the city are expected to service the debt.

2) A state recives a federal educational grant intended to assist local school districts in hiring additional teachers. the federal granting agency establishes the criteria taht the stae is to use in determining the school districts to receive the awards and determins the amount they are to receive. The federal governemnt, not the state, is responsible for monitoring frant compliance. The State's only responsibility is to write the checks to the cities and counties.

3) A stae receives a federal educational grant intended to assist local school districts in hiring additional teachers. The federal granting agency establishes the criteria that the state is to use in determing the scholl districts to receive the awards and the amounts they are receive. The didtrict has no discretion in selecting recipients other than to apply the specified criteria.

4) A county collects sales taxes that it ditrubutes among itself and the towns within its jurisdiction. the taxes are levied by the county and are divided among the recipient governements in accordance with a formula set forth in the legislation that authorized the tax.