Question

A type of governmental fund that accounts for resources for which the governmental units acts as trustee or agent is a:

A. Permanent fund

B. Fiduciary fund

C. Special revenue fund

D. Proprietary fund

Answer 1

A is the answer

A.Permanent fund

In the United States, a permanent fund is one of the five governmental fund types established by GAAP. It is classified as a restricted true endowment fund for governments and non-profit organizations. Put simply, a permanent fund may be used to generate and disburse money to those entitled to receive payments by qualification or agreement, as in the case of Alaska citizens or residents that satisfy the rules for payment from their permanent fund from State oil revenues. It was first introduced through GASB Statement 34. The name of the fund comes from the purpose of the fund: a sum of equity used to permanently generate payments to maintain some financial obligation. Also, a fund can only be classified as a permanent fund if the money is used to report the status of a restricted financial resource. The resource is restricted in the sense that only earnings from the resource are used and not the principal. For example, a fund can be classified as a permanent fund if it is being used to pay for accounting services for a perpetual endowment of a government-run cemetery or financial endowments towards a government-run library.

B.Fiduciary fund

Governmental entities frequently manage and/or process resources on behalf of other entities or individuals. Since these resources do not truly belong to the governmental entity, they are recorded separately in a group of funds called Fiduciary Funds.

C.Special revenue fund

Account for the proceeds of specific revenues from taxes, grants, entitlements, or other earmarked sources that are restricted or committed to expenditures for specified purposes other than debt service or major capital projects
(e.g., a gasoline tax that must be spent on road maintenance, private foundation grants that must be used to provide training opportunities for disadvantaged workers).

D.Proprietary fund

Governmental entities sometimes engage in activities in which they operate much like for-profit organizations. Public utilities, convention centres, motor pools, and airports are common examples of these activities.

These activities result in exchange transactions, that is, charges to users for the goods and services that they receive. Most exchange transactions are recorded in a group of funds called Proprietary Funds