F10 State and Local Governments PART 2 – Fiduciary funds

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  • #1829923
    shawnl112
    Spectator

    The City of Opulence maintains an investment pool to invest idle cash. They city extends the service to benefit its own funds as well as other governments. The invested assets would be accounted for as follows:

    City-owned funds Funds from other governments

    A. Internal service fund Agency fund
    B. Investment trust fund Internal service fund
    C. Assets of investing fund Investment trust fund
    D. Agency fund Assets of investing fund

    Can someone explain why C is correct?

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  • #1829926
    shawnl112
    Spectator

    This is just to make the question more clear

    The City of Opulence maintains an investment pool to invest idle cash. They city extends the service to benefit its own funds as well as other governments. The invested assets would be accounted for as follows:

    City-owned funds /Funds from other governments

    A. Internal service fund /Agency fund
    B. Investment trust fund /Internal service fund
    C. Assets of investing fund /Investment trust fund
    D. Agency fund /Assets of investing fund

    Can someone explain why C is correct?

    #1831813
    Globetrotter
    Participant

    Hi,
    I would do this by elimination. Please note that they say “as well as other governments”.
    I think that A and D would be incorrect because Agency Funds are simply custodial funds. No activity in these funds.
    B is incorrect because Internal Service Fund would not serve “other governments”.
    That leaves C. Per GASB 31:
    “A governmental entity that sponsors one or more external investment pools should report the external portion of each pool as an investment trust fund”.
    Hope this help.

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