1) In which of the following funds would a government not report depreciation ex
ID: 2577372 • Letter: 1
Question
1) In which of the following funds would a government not report depreciation expense?
a) Private-purpose trust fund
b) Investment trust fund
c) Permanent fund
d) Pension trust fund
2) The City of Matthews has been given a $1,000,000 gift that is restricted by the donor, Rebecca Smith. Ms. Smith’s gift agreement mandates that only the earnings from the gift may be used to support the families of policeman killed in the line of duty. Which fund should be used to account for the gift?
a) Special Revenue Fund
b) Permanent Fund
c) Capital Project Fund
d) Private Purpose Trust Fund
3) The principal and earnings of a gift held in trust that can be spent for a city owned park should be accounted for in which of the following funds?
a) Permanent Fund
b) Special Revenue Fund
c) Investment Trust Fund
d) Private Purpose Trust Fund
4) To what type of account are benefits paid to employees recorded in a Pension Trust Fund usually debited?
a) A deduction account
b) An expenditure account
c) An expense account
d) A net position account
5) Financial statements for a Private Purpose Trust Fund
a) Are included in a government’s annual financial statements
b) Are categorized as governmental fund financial statements
c) Are included with the General Fund for financial reporting purposes
d) Are included with a Special Revenue Fund for financial reporting purposes
Explanation / Answer
ANSWER 1
(c) Permanent Fund:
Permanent fund is not used to report depreciation expense
ANSWER 2
(b) Permanent Fund
It is so because a key feature of permanent fund is that only earnings from the fund are used to maintain some financial obligation as in the given case it has been stipulated that only earnings from the gift shall be used to maintain families of policemen killed in the line of duty.
ANSWER 3
(d) Private Purpose Trust Fund
A Private purpose trust fund is used for the accounting of principal and earnings of trust maintained to benefit the individual, private organization.
ANSWER 4
(c) expense account
Expense account is used for this purpose since it part of expense for an organization
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