What is the appropriate measurement focus and basis of accounting for trust funds?

The appropriate measurement focus for trust funds is the economic resources measurement focus, which evaluates the entire economic resources of the entity, including both current and noncurrent assets and liabilities. This focus provides a comprehensive view of the assets available to meet the obligations of the trust.

In addition, the basis of accounting for trust funds is accrual accounting. This method recognizes revenues when they are earned and expenses when they are incurred, rather than when cash is received or paid. This approach is essential in reflecting the true financial position and performance of the trust fund over time, as it allows for a better matching of revenues and expenses.

The combination of the economic resources measurement focus and the accrual basis of accounting provides a complete and accurate representation of the trust fund's financial activities, making it suitable and reliable for understanding the trust's financial health and ensuring fiduciary responsibilities are met.