ch08 - Chapter 08 - Accounting for Fiduciary...

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Chapter 08 - Accounting for Fiduciary Activities—Agency and Trust Funds 8-1 CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES AGENCY AND TRUST FUNDS OUTLINE Number Topic Type/Task Status (re: 14/e) Questions: 8-1 Distinction between agency and trust funds Distinguish Same 8-2 Identifying trust funds and their purpose Explain New 8-3 Agency funds and payroll issues Explain Same 8-4 No fund equity in agency funds Explain Same 8-5 Agency funds for “pass-through” funds Define and Explain New 8-6 Investment pools Explain Same 8-7 Use of fair values for investments Explain and Compare New 8-8 Private and public purpose trusts Distinguish Same 8-9 Evaluating pension plans Explain New 8-10 Investment risk Define New Cases : 8-1 Internet Case - PERS Locate and Explain Same 8-2 Identification of fiduciary funds Explain Revised 8-3 OPEB Plans Analyze New Exercises/Problems: 8-1 Examine the CAFR Examine Same 8-2 Various agency and trust fund issues Multiple Choice 8-2, 8-5, 8-10 New 8-3 Various agency and trust fund issues Multiple Choice 8-8, 8-9, 8-10 New 8-4 Tax agency fund Journal Entries Same 8-5 Special assessment agency fund JEs and Analysis New 8-6 Fund identification JEs and Analysis New 8-7 Investment trust fund Journal Entries Same 8-8 Defined benefit pension plan Calculate Revised 8-9 Defined benefit pension plan statements Financial statements Same 8-10 Fiduciary financial statements Analysis Same
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Chapter 08 - Accounting for Fiduciary Activities—Agency and Trust Funds 8-2 CHAPTER 8: ACCOUNTING FOR FIDUCIARY ACTIVITIES— AGENCY AND TRUST FUNDS Answers to Questions 8-1. Although in law there is a clear distinction between an agency relationship and a trust relationship, in practice the legal distinctions are not sufficient to classify funds as agency funds or trust funds . As the introduction to Chapter 8 explains, the name given the fund is not a reliable criterion for identifying the types of transactions in which the fund may engage. All factors, such as the enactment that created the fund and pertinent regulations, must be examined to determine the nature of the fund and the transactions in which it may engage. Generally, trust funds are more complicated than agency funds, requiring greater representation and development of the beneficiary’s interest. 8-2. There are many different types of trust funds. For reporting purposes GASB classifies trust funds as investment trusts, private-purpose trusts and pension trusts (also referred to as pension and other employee benefit trusts). An investment trust fund is used to account for and report the fund equity held by fund participants who are external to the government operating the fund. Private-purpose trust funds record and report principal and/or interest managed by a government for the benefit of an individual, private organization or another government. The distinguishing characteristic is that the party benefiting from the trust must be external to the government operating the trust. In
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This note was uploaded on 11/29/2009 for the course ACCT 341 taught by Professor Burdan during the Fall '08 term at American.

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ch08 - Chapter 08 - Accounting for Fiduciary...

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