Question

The Western Falls School District received a $100,000 gift from a wealthy alumnus, and an agreement was reached that $10,000 per year would be paid to the valedictorian of the high school class as a freshman scholarship to college, until the funds were depleted. The $100,000 would be accounted for as:

a. An expendable trust fund.
b. An investment trust fund.
c. An agency fund.
d. A private-purpose trust fund.

Answer 1

The $100,000 gift received by the Western Falls School District is accounted for as a private-purpose trust fund.

Step-by-step explanation:

The $100,000 gift received by the Western Falls School District is accounted for as a private-purpose trust fund. A private-purpose trust fund is created when funds are donated to a government entity or nonprofit organization for a specific purpose or benefit of individuals or organizations outside of the government entity or nonprofit organization itself. In this case, the funds are used to provide a freshman scholarship to the valedictorian of the high school class, which is a private purpose that benefits individual students.