What is the difference between Permanent Funds and Private Purpose Trust Funds?
What will be an ideal response?
Permanent Funds and Private Purpose Trust funds differ in both purpose and accounting treatment. The purpose of a Private Purpose trust fund is to generate income to benefit individuals, private organizations, or other governments. The purpose of a Permanent Fund is to provide income to benefit the government and its citizenry. This difference in purpose results in significant differences in the accounting. Permanent Funds are accounted for using the modified accrual basis and current financial resources measurement focus while Private Purpose Trust Funds are accounted for on the accrual basis and the economic resources measurement focus. Additionally, Permanent Fund balances are included in the government-wide financial statements, while Private Purpose Trust Funds (like all Fiduciary funds) are not.
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