A New employee of the city of Kashime was working with the accounting records of several of its funds.
This employee, John Fergie, found that a gift had been given to the city for the library. The gift mandated
that only the earnings from the gift could be used for library operations. John wanted to setup a
Permanent Fund for the principal of the donation to the library and use a Special Revenue Fund to account
for the earnings of the investment and their use. Another employee argued that a Private Purpose Trust
Fund should be used for both, principal and income.
Required:
Do you agree with either of these individuals? or
Do you have a better suggestion?
Sample Solution