Choose the best answer.
1. Which of the following helps identify the existence of a fiduciary relationship?
a. The reporting entity does not control the assets.
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 is not a fiduciary fund?
a. Permanent fund.
b. Private-purpose trust fund.
c. Investment trust fund.
d. Custodial fund.
3. 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 fund used to distribute scholarships to the children of the city’s police officers.
c. A fund used to account for gasoline taxes collected for road maintenance.
d. A fund used to account for risk management services provided to other funds of the administering government.
4. Fiduciary fund activities are not included in the government-wide financial statements
a. Because the resources in the funds are not owned by the government.
b. Unless the government has an interest in the fund activities.
c. If there is no fiduciary net position in the fund.
d. When there are offsetting liabilities.
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 exits 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. How are custodial funds reported in a CAFR?
a. Custodial funds are reported in the statement of changes in fiduciary net position.
b. Custodial funds are reported in the Governmental Activities column of the government-wide statements.
c. Custodial funds are reported in the Business-type Activities column of the government-wide statements.
d. Custodial funds are reported in a required supplementary information schedule.
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. Cannot recognize investment gains until the associated investment is sold.
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.
d. 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 smaller than pension costs.
d. Similar to pension trust funds, OPEB funds are frequently state administered.