QUESTION 1 Which of the following are cORRECT regarding Pension Trust Funds? (Se

Question

QUESTION 1 Which of the following are cORRECT regarding Pension Trust Funds? (Select all that apply) Realized gains are credited to an account called Additions- Realized Gains from Security Transactions OB. Pension trust funds report investments at fair value. aC. Pension trust funds use the economic resources measurement focus and the accrual basis of accounting D. Liabilities for benefits and refunds are reported only when due and payable in accordance with the terms of the plan. E. The activity reported in a Pension Trust Fund is included with business-type activities in the government-wide financial OF. Pension trust funds do not report any long-term liabilities. statements. H.Pension trust funds must present a statement of cash flows. -1. The operations of pension trust fund for local governments are usually controlled by pension plan document or agreement and local and state laws. J. Pension trust funds never report capital assets or deprecation expense

Explanation / Answer

Correct Points for Pension Trust Funds are: B,C,D,E,I.

Points which are not correct are: A,F,G,H,J.

A. Gains from Security transactions are simply added to the fund of the employee and not in a separate account.

B. Investments by Pension Trusts are reported at Fair Values using Closing market prices.

C. Pension Trust Funds follow accrual basis of accounting and present the net assets available for benefits and changes in net assets available for benefits.

D. Reporting is done only when the benefits are due and payable. Need not report for current employees who will retire in future.

E. The reporting of activity is in Government wide financial statements within Business Type activities.

F. Pension funds report liabilities which can be short-term as well Long-term. However, it doesn't need to show it separately.

G. Net Position is simply shown as Net assets available for benefits.

H. There is no mandate to present a statement of cashflows. Mandatory requirement is to show Statement of Net Assets available for benefits, Statement of Changes in Net Assets available for benefits and Notes to Financial Statements.

I. The rules and regulations to be followed by a Pension Trust are controlled by Pension Plan documents or agreement as governed by Local or State Law.

J. Pension Trust Funds do report their real assets which includes capital/depreciable assets. Assets, which in any way help to manage the funds of the Trust, will form part of the investments in the financial statements of that trust.

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