8-1. Explain the distinction(s) between agency funds and trust funds. What financial statements are prepared for each? With Agency funds and trust funds there are some clear distinctions, like fiduciary which are agency funds. Generally, trust funds are more complicated than agency funds, requiring greater representation and development of the beneficiary’s interest. Agency funds are fiduciary funds, also called conduit or clearinghouse funds. They are established to account for assets received for and paid to other funds, individuals, or organizations. These assets are offset by liabilities equal in the amount and no fund net position exists; therefore, Agency funds are not included in the statement of changes in fiduciary net position 8-2.Identify the different types of trust funds and explain the purpose of each type. For reporting purposes GASB classifies trust funds in three types: investment trusts, private-purpose trusts and pension trusts. An investment trust fund is used to account for and report the fund equity held by fund participants who are external to the government operating the fund and its own money. Deductions in this fund are withdrawals and investment expenses incurred. Private-purpose trust funds record and report principal and/or interest managed by a government for the benefit of an individual, private organization or another government at the present time or future date. The principal or corpus of the trust is the fair value of assets placed into the trust. The principle can be expendable or nonexpendable. The distinguishing characteristic is that the party benefiting from the trust must be external to the government operating the trust. 8-3. Describe the basic activities conducted by a tax agency fund. What are some of the issues that make tax agency fund accounting complex? Basic activity conducted of tax agency fund is collection of all the taxes (property taxes etc.) of the county or other area (jurisdiction) Then all proceeds are distributed into each county’s government. It is used to combine tax levies from multiple governments in the same geographic area. This will avoid duplicating assessment and collections processes. Then each government continues to maintain their own tax records individually. ...