Question

Which of the following statements is not true regarding custodial funds?

Multiple Choice

a) Custodial funds are reported in the fiduciary funds Statement of Fiduciary Net Position.

b) Custodial funds use modified accrual accounting.

c) Custodial funds may report assets, liabilities, and fund net position.

d) None of the choices; all are true.

Answer 1

Answer: Option d) None of the choices, all are true.

Explanation:

Custodial funds are refers to savings account at a financial institution, mutual fund company, or brokerage firm than adult controls for a minor ( a minor under the age of 18 or 21 years, depending on the laws). Approval from the custodian (minor) is mandatory for the account conduct transactions, Such as buying or selling securities or other any assets.

Custodial funds are reported in the fiduciary funds Statement of Fiduciary Net Position is true as of custodial funds laws.

Custodial funds use modified accrual accounting means modifications are done in the accounting records on the basis of accrual accounting.

Custodial funds may report assets, liabilities, and fund net position and the assets, liabilities and fund all are recorded in the records for the purpose of custodian must know the value of assets, liabilities and fund net position and the assets.

Therefore, all the given statements are true.

Thus, Option d) is correct and remaining options are incorrect.