Final answer:
Agency funds are used in governmental accounting to report resources held in a custodial capacity. The correct statement about agency funds is that they are reported only on the statement of fiduciary net position. They may handle cash and have different accounting practices than permanent funds.
Step-by-step explanation:
The question concerns agency funds, which are used in governmental accounting. Agency funds account for resources held by a government in a purely custodial capacity; these funds involve only the collection, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments.
The correct answer to the question: Which of the statements concerning agency funds is true? is option b. Agency funds are reported only on the statement of fiduciary net position. This is because agency funds do not support the government's own programs and thus do not result in additions to the government’s net position. Instead, these funds are strictly custodial and so are reported separately to reflect the fiduciary responsibility of the government.
Therefore, the other options presented are incorrect because agency funds: a. may use a different basis of accounting than permanent funds; c. do not use temporary accounts Additions and Deductions as these are used by permanent and special revenue funds; and d. they often handle cash, as holding and transferring cash is often the primary function of an agency fund.