Permanent and Fiduciary Funds

timer Asked: Feb 28th, 2018
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Question description

Hi, you worked on this assignment last semester and this was the feed back from my instructor "Maximum possible points for the assignment: 75
Total points earned for the assignment less any late penalty (rounded): 15

- Task Requirements points earned: 10 out of 19
- Demonstration and application of knowledge points earned: 0 out of 41
- Academic writing and format points earned: 5 out of 15
- Late Penalty (0%) points subtracted: (0)

Strengths: See Comments Below

Opportunities for improvement: See Comments Below

Additional comments: Your post did not demonstrate an understanding of the material. You did answer the questions you were supposed to answer. Your reference did not pertain to this discussion.

The ASSIGNMENT READS "In a recent city meeting, it was agreed that the city was going to build a new town hall. Long-term bonds, intergovernmental transfers, and public donations will be used to construct and maintain the building. The major discussion was how to record the donations meant to fund ongoing maintenance costs. One group wants to set up a permanent fund for the principle of the investments and use a special revenue fund to account for the earnings of the investments and their use. The other group wants to use a private purpose trust fund for the principle and interest. Address the following:

  • Which group do you agree with? Do you feel that there is a better way to record these transactions?
  • Give details that support your choice.

Permanent and fiduciary funds In recording the donations for funding the ongoing maintenance cost, I would agree with the first group. This group calls for the set up of a permanent fund for the principle of the investment and use a special revenue fund to account for the earning of the investments and their use a special revenue fund to account for the earnings of the investment and their use. This will of great benefit to the management and other interested parties. Adopting this method of recording transactions has various benefits. To begin with, this type of recording enables the organization to measure and determine their financial independence. In the course of building the said town hall, there is need to differently determine funds that support the investment from outside the organization and the earnings from the investment (Vakil, Sanam, 2011). Keeping this account separately enables an organization determines if its control of the finances. Consequently, this type of recording gives checking account diversification when there is an emergency. In case there is a problem in one of the account the organization can use the other accounting pending the correction and restoration of order in the other account. Also, one account can be used to correct the other in case there are mistakes. Also, this recording can be used as a financial diversification. Recording permanent funds and revenue fund can be used to supplement each other especially if the permanent fund fails. Thus revenue fund can be used as a fall back on. Lastly, this type of recording ensures financial stability. Recording permanent and revenue funds separately enable one to view one’s financial status at their wish. This status can be evaluated on short notice and tell the position of the organization. Works Cited Vakil, Sanam. Women and Politics in the Islamic Republic of Iran: Action and Reaction. New York: The Continuum International Publishing Group, 2011. Print.

Tutor Answer

Nicholas I
School: Cornell University

Hi, kindly find attached

Student’s Name
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Permanent and Fiduciary Funds
I would be in total agreement with the group that prefers to keep records of the donations
that were to be used for the maintenance cost of building the mall using the private purpose trust
fund for the principal and interest. There are several better ways that could be used for the
recording of these transactions. The first alternative would be, to record the transactions under
the internal service fund or use the enterprise fund.
My pref...

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